Okay. Welcome everybody. We thought we'd kick off a little bit earlier, give us a little bit more time for the inevitable Q&A later in the session. Thanks very much everyone for traveling to spend some time with us today. I know it's not easy to get to Atlanta from, certainly from the East Coast of Australia, so I'm grateful for you taking the time, making the effort. It is really good to be back together face-to-face after a few years of trying to do this via Zoom, and I think we're all Zoomed out. Thanks very much. I really appreciate it. Let's get straight into it. I think you met or were able to catch up with all these folks last night.
This is who's presenting today. One point I would make is we're not covering Asia-Pac today, we're gonna focus on the Americas and EMEA. We've got people from those two regions here today, as well as people from our group or our corporate function. This is the agenda. Today, for us, it's all about our story, what we wanna talk about, as opposed to a couple of weeks ago, which is everything that you wanted to talk about through the earnings release. This is about our long-term growth. This is how we view our business and why we think we're really well positioned and can grow this business over the long term.
We will, I suspect, stop briefly on August trading, because I know if we don't, we'll get a whole lot of questions on that. We will stop briefly on August trading and answer one or two questions there if there are any. We'll get into the meat of it. We'll start with the business overview. For those of you who aren't that familiar with our business, this will help position it. For those of you who are, it'll be a reminder of what we do and where. The middle section there, that's the core of the presentation today, okay? That's about how we grow the business, how we drive the business going forward.
The final, the third section today is we'll talk about why we believe we're really well positioned to outperform the market going forward, to continue to outperform the market going forward. We'll then touch on ESG and our people focus, which is really a core for our business. Our people drive this business. We get them engaged and aligned, we're gonna get a good outcome, so we wanna touch on that as well. Before I hand over, though, these, I think, are the key highlights that I'd really like you to take away today. Four points here. First one, we really are optimistic about the growth outlook for the business. Okay? Our strategy is unchanged, still valid, and it's really powerful, okay? It will continue to drive our growth going forward. That's the first point. Second point, we are really well positioned.
We are in the defensive repair and remodel market. This, combined with the strength of our brand, the relationships we've got, and our execution capability, and the nature of our product, all these things together will allow us to outperform the market generally, regardless of what the market does. Third point, last few years have been tough, really tough, and we've focused necessarily on day-to-day execution. Okay, it's been hand-to-hand combat sometimes it feels like. We have still spent a lot of time and effort investing in the business over that period of time. We have not in any way, shape, or form neglected the future, and we wanna step you through that as well. We are really well positioned to accelerate out of whatever slowdown, dip may or may not occur in the future. We like the way we're positioned. They're the first three points.
The fourth point is really this afternoon when we'll get hands-on with our products over in our training center. What we want to do there is bring to life what we're going to talk about here this morning. Okay? We want you to understand from that hands-on experience why our end users want to use our product, why they demand our product, and we want you to understand why the distributors want those products on the shelf. Okay? That's absolutely fundamental to our business. It's what's driven our growth up to now, and it's what's driven our growth going forward. That hands-on activity this afternoon is intended to reinforce point one up there, which is what the driver of our growth of our business is. They're the four points.
Before I hand over, though, I need to say it's really pleasing for me to be here today with an incredibly talented group of people from the RWC business. These really high caliber, committed people make this business what it is and has driven us to where we are and will drive us going forward. It makes my job thoroughly enjoyable. Thank you, everyone. I look forward to seeing you all present during the course of the day. That's it. Please enjoy being in our business today. Hopefully, you'll have some fun moments along the way, and we'll do a safety brief. Fun moments, no one goes away injured. We'll do a safety brief when we get to the training room this afternoon.
Safety here this morning is office safety, the same as your normal work environments. With that, over to Andrew.
All right. Thanks, Steve. We did think we would hit August trading quickly, and get that out of the way. What I'd like to share with you, just a couple of points on the numbers. The percentages we're showing year-over-year, it is in constant currency. Please don't extrapolate, one month or even two months. Our business just is not linear that way. We did wanna walk you through. We feel like we had a strong result in August. Group sales for the month was up 45% on the prior year... I'm sorry. You'll tell me that more than once, I'm sure, before I finish this. Up 45% on the prior year. When you exclude EZ-FLO, it's up 20%.
As we walk down through the Americas, including EZ-FLO, up 62%, and that's a great number. EZ-FLO was $19.6 million in the month of August. That's up on July, and that's also up on the average we saw in the fourth quarter of FY 2022. Good to see continued momentum and continued growth in that business, in that acquisition. We're very pleased with where we are right now. When you exclude EZ-FLO, Americas business was up 19% in August. Positive revenue growth in all channels, strong results in retail, wholesale, hardware. That's the key message. We saw good demand, good pull-through in all of our channels in the month of August. In Asia Pac, August was up 11%. External sales were up 22%.
The internal intercompany sales of the SharkBite fittings made primarily in Melbourne, sold to the U.S., were down 3% year-over-year. In EMEA, very pleased to see the UK number in August up 27% year-over-year. Intercompany sales were actually down 35% during the month, and so that works out to an 8% up overall for that EMEA business in the month of August. Overall, a good result in August. Pleased to see the numbers. I think it confirms the outlook that we gave in August that contractors are busy, demand is certainly holding up for our products, and that our products, we feel, will be resilient given our exposure to repair and remodel. With that, I will quickly open up for a few questions if there are any. Lee?
Can you maybe just talk a bit about any inventory impact on those numbers?
In wholesale. Yeah. Customer or channel inventories had no impact to our business in the month of August, and that's, you know, kind of as expected. You know, when we talked about in July, we felt like there was cautiousness in the wholesale channel, and that was mostly anecdotal. We didn't see that in August. Standing here today are not aware, at least for our products, of plans in the wholesale channel to bring inventories down. On the OEM side, I think there's still a lot of water heater inventory in the market, and as we talked, they did the shutdown in July. I'm not aware of further shutdowns in August, so that demand will adjust fairly quickly, we feel.
Can you provide a breakdown in price and volume for the 27%?
I don't wanna talk region-specific, but when you exclude EZ-FLO, in the month of August, if you look back last year, we were starting to get traction on pricing, so there was price coming through in August. When you look year-over-year, price in that 20% globally would be mid-single digits.
To manage the Q&A, if you could raise your hand and we'll hand you the mic 'cause we're going to capture this for video purposes. Sorry, we should have said that at the outset.
Thank you for the trading update for August. Can you just comment, even if only qualitatively, what's been happening to margins and margin recovery now that the price increases have come through?
Look, I appreciate the question. I feel like, you know, margins continue to develop as expected. The pricing that we had planned, certainly through the fourth quarter, and so a couple of those pricing actions that we had planned in as new pricing action have come through as we thought. You know, I think margins, we're gonna have to continue to have a dynamic business and react to what we see in terms of inflation, and also volumes and inventory movements. When you look at the intercompany sales for EMEA and APAC, they're down year-over-year, and that's part of the work that we're doing to bring inventories down. We know that as a manufacturing business, that'll impact recoveries, but that just is what it is.
It's what we need to do for the business. Overall, I think it's trending as expected.
Hey, Andrew. I guess in terms of the boost that we saw in August, do you have any more color around what's driving it? Is it just largely catch up from a slower July? Do you have any insight into that?
You know, I think that there were some one-offs in July that obviously we didn't see in August. I think the August trading really reflects more of the normal trend that we're seeing in the business. Nothing unusual to call out, no big customer initiatives, no swings in terms of channel partner demand. August really looks like what we would have typically seen in July had we not had a couple of the things that we've been talking about.
Andrew, just, with regards to your inventory investment, have you seen any easing of supply chain issues so that you can sort of reduce that investment?
You know, it's a very dynamic situation. I do think overall container shipments are moving better through the supply chain, but there certainly still is struggles. It is something that we are keenly focused on. You know, in the U.S., there's discussions around a railroad worker strike. Hopefully, that got averted based on news we heard last night. That just lets you know how dynamic things are. It does feel like things have improved.
Thanks, Andrew. Would you mind commenting what the Americas ex EZ-FLO growth in August would have been if you adjust for the Lowe's warehousing change in the PCP?
I don't wanna bridge it for you, but we did have that Lowe's inventory reduction based on their distribution changes that they made last year, and we felt like we note here that it was roughly $6 million in August. When you adjust for that and you adjust for price, unit growth was roughly flat in the Americas. Okay. Well, with that, I think we'll move on to the
Wait. One more.
Okay. Christian.
Andrew, just that improvement in EMEA in August. Can you maybe talk about the U.K. versus the continent and just what drove that improved U.K. performance?
You know, you'll get more color on the U.K. through the course of the presentation, and we've got Evan here who runs our EMEA business. You know, through the course of FY 2022, certainly in the second half of FY 2022, we had two parts to the business. We had continental Europe with the FluidTech fittings, and they were really doing well. We saw demand soften in the U.K. That feels to have kind of flipped around a little bit in that you know, some of that reopening demand on the FluidTech side, which is, again, tied to repair, I mean, not repair, hospitality, bars, restaurants with drink dispense and water filtration and whatnot. That feels like that's softening up.
The U.K. business has held up quite well. We didn't give you monthly commentary, but it's not something we've just seen recently. That's a trend we've seen over the last few months. We'll see where we go. Again, that's a very dynamic situation. Generally speaking, demand in the U.K. And in Europe will be a part of the business that we're watching closely. Okay. Well, thanks for that. Normally, the finance guy just has to stick to the numbers, and so they're letting me present some of the strategy slides here, which I'm pretty excited about. Hopefully, Heath, hopefully, I don't screw this up. This section, we're gonna talk about our purpose. What's the purpose of RWC?
This is something that a tagline that has developed organically in our business certainly over the last couple years. Plumbing has been a good place to be, and certainly through COVID and supply chain issues and other things that we've seen. The reason why is plumbing matters. Plumbing matters in our daily lives. Plumbing matters whether we're in a low interest rate, high home turnover environment. It's gonna matter if we're in a high interest rate, low turnover environment. We joke all the time that if you've got a leak in your house, that becomes your top priority, not even for the day. That's your top priority, like, for that minute. Plumbing matters, and I think it will always matter.
Certainly, I'm very pleased that my family's income is tied to the plumbing industry because it's a great place to be. I think RWC, specifically, given where we play in the plumbing space, is a great place to be. Plumbing matters, and RWC makes it better. We make it easier for the contractor. We make them more efficient. They can get more work done in less time, more profitably. We make it easier for the do-it-yourselfer and the homeowner. We empower those type of users to work on projects, and they do. I think importantly, especially credit to our internal teams, we make it better for our channel partners in our ability to execute, our ability to put product on the shelf, our ability to display those products, how we manage our planograms.
That's why we've been so successful with those channel partners. We make it better for them. We make it easy for them, and that's what they want. Plumbing matters. RWC makes it better. Our vision overall is that we wanna continue to expand our plumbing catalog to meet those plumbers' need, to meet that professional plumber's need. Everything on the plumber's truck is what we're targeting. That's a great visual for us. It's a great visual for, I think, people that are interested in our business and how we're gonna grow. We're gonna take over that plumber's truck and everything that a plumber would have, pipe, fittings, valves, the wide range. I think that we've made a lot of inroads in that direction.
We're probably more represented on a plumber's truck than most people would realize, but we've got a long ways to go, and I think that's gonna be a great growth vehicle for the business. Our aspiration for this business is to continue, and I think that's the key word, is to continue to build a stronger, more diversified business through profitable growth, both organic growth and M&A. That's for the finance guy, that's an important word. I think you can ask the question, well, what makes you confident that you can continue that? I think our confidence comes from our track record. Nothing supports our aspiration better than looking back over the last 10 years in this business, and even before that.
This is a chart I think that we're all very, very proud of, and it walks you through in the blue bars how we performed pre-IPO, and it shows the black bars which are post-IPO. How many companies can show a chart like that where not only did we grow top-line revenue, not only did we invest in the business, not only did we take what was a relatively small Australian private company into a global public business as it is now, but we also grew EBITDA margins 440 basis points from 2016 to 2022. We feel like that's really remarkable, and that's something that certainly we're proud of. The growth rate is a great picture. 20% CAGR post-IPO. We had roughly 13% CAGR pre-IPO.
That's a track record that we're extremely proud of, and that's a track record that we'll stand behind. That's what gives us the confidence to say that we're not ex-growth. We've always grown, and we'll continue to grow this business. How are you gonna grow, someone may ask. I think we're gonna follow the same playbook in the future that we followed in the past. We've talked a lot over the last couple of years about how we grow this business, and it's really a consistent approach. We're fortunate that market growth for our products are gonna be in that 2%-3% range. What this chart does is it tries to break down that growth from the IPO to 2022. We're fortunate that plumbing products grow.
Typically, it's close to GDP, but we feel like it's been more in the 3% range, market growth through that period. We're gonna put growth on top of that. We're keenly focused on above-market growth. Above-market growth really is supported by the strong brands that we have in our portfolio. You can talk to anyone about SharkBite, and you'll get a great response. It's not just SharkBite. It's Cash Acme. It's HoldRite. It's John Guest. Now EZ-FLO, Eastman. We've got great brands in our portfolio. We're also taking share, and that's not just share from our competitors. That's growing the interest and the willingness of the plumber to use our products, primarily Push-to-Connect. Push-to-Connect, we continue to get plumbers that will use our product, and there's a wide range.
There's plumbers that say, "I'd never use that product," but yet they've got half a dozen on their truck, all the way to plumbers that use it exclusively. I think now that we're, gosh, how many years into this, Heath? All plumbers use our product to some extent, and that's continuing. We're continuing to find ways. Plumbers are continuing to find ways to use our products, and that's really part of how we grow above market. Organic growth. You're gonna hear a lot about products and new product development. Certainly, that's a key part of our organic growth. There's customer initiatives that are in that bucket, and we've talked about those and there where you'll find the channel partner relationships really come into play. Of course, we've got M&A.
RWC has a strong track record of making good acquisitions and then doing a good job with integrating those into our business. I think what we're pretty proud that early days, but looks like EZ-FLO will fall into that category. I know I'm going over here, but and I'm almost done. A lot of numbers on this page, but here we're talking about our foundation. What is the foundation of our business? It's really, it's two things. It's our people and our culture, and the other part of that is our products. This is how we've developed now in 2022. Across three regions, 21 facilities in the Americas, 14 in EMEA, and 22 in APAC. You can see the numbers on the left about how that breaks down by types of facilities.
We're very proud of every dot on that map. Every dot on that map also represents people, and you'll see quite a few here today that make this business run every day. Of all those numbers that you see there, the most important number is one. I think we're one team, one culture. We've got one system that runs our business, that allows us to speak one language, look at the business in the same ways, and that is RWC. Our culture, I feel like, is the most important part of what we've developed over the last few years. Just quickly, you know, most people I don't think realize that our products participate in projects across the spectrum, from residential to multifamily, all the way up to large high-rise.
Now, not all participate in all projects, but we're certainly represented, and most importantly, as I'd mentioned, with very strong brands that have real power in the marketplace. I love this chart because picture this with everything on the plumber's truck. We want every plumbing fitting in your house, and I think we have a lot of them. You can see this is kinda like one of those kids' books where you can spot the plumbing, the RWC fitting, but they're everywhere in your home when you start looking for 'em. Quite a few on there that we haven't even called out. The more we look at this, the more we realize, you know what, they could have had a line to the stove 'cause now we have gas connectors.
If we could have put a coffee maker on the counter and had a FluidTech fitting that's a connection. We've got plumbing fittings in every room in your house where there's water. Not only that, we go from meter to main in terms of products that we have that deliver to a residential environment. Very proud about that, and very excited about where we feel like we can take this business. To recap, our purpose, plumbing matters, and we make it better. Our foundation is our people, our culture, and great products. Thanks for that. Now I'll hand over to Edwin, who heads the EMEA business.
See whether this one works. Yeah, I think it does. Hey, good morning, everybody. It's my pleasure to give you an update on the European business. I'll start with a high-level overview, then I'll take you through some of the customers and some of the channels that we serve in our region. Finally, I'll take you through some of the new product launches that we've been doing over the fiscal year 2022, which is key to us because, you know, new products is close to our heart and helps us to build our business. To start with, the majority of our production is actually in the U.K.
I know some of you have visited our larger site in West Drayton, where we make actually the full range of John Guest Speedfit fittings and FluidTech fittings. Okay? On top of that, we have a smaller facility that is in Launceston, Cornwall, that actually makes smaller run products and specific products. Imagine, you know, 15 mm elbows and Ts are the big runners for us in the Speedfit range. Obviously we also have the 26 and the 28 mm, which is a lot less requested, and that's what we make, for instance, in Launceston. On top of that, we make all of our flexi hoses in Launceston, and we make specific FluidTech products fully in Launceston. The third manufacturing site that we have in the U.K. is Maidenhead, where we have centralized all of our extrusion.
All of our extruded product comes out of that Maidenhead facility. Okay? To stay in West Drayton for a second, yes, we have our headquarters there, but that's not the most important piece. The most important piece that we have next to the manufacturing is our design and engineering team, which gives us a lot of capability in-house, and we'll talk, you know, throughout this presentation a little bit more around that. Okay? If I then move to continental Europe, we have one production site in Granada, Spain, where we actually produce predominantly PEX-A and a little bit of PERT for our European customers. All the other sites in Europe are basically sales offices, but with their own warehousing and distribution capability.
That's extremely key to us because as you'll see later on, the customers that we serve in Europe are more OEM type of customers rather than wholesale customers, and therefore, you need to be much more flexible in what you supply, when you supply, and how quickly you can supply. Having your own warehouse and your own capability to do that is very helpful to us. If you look at what we actually sell across Europe, as you can see, we sell about 75% of what we do in total into the plumbing and heating market, and about 25% is going into FluidTech. You could actually even make that same split geographically, because if you look in the U.K., our predominant sales is into plumbing and heating, whilst in Europe, the predominant sales is into FluidTech.
Finally, if you look at, you know, just the U.K. plumbing and heating, as you can see, we sell about, you know, 75%-80% into repair and remodel, and the rest is what we do into new build. In new build, some of our fittings are being sold, our Speedfit fittings, but also we sell there our on the floor heating systems. We sell some of the Reliance Valves, which predominantly end up into new build rather than into the repair and remodel. So that's how our business high level is made up. If I then move into, you know, our customer base a little bit, if you look at the U.K., we actually have two channels how we go to market in the U.K. First channel is our wholesale channel, okay?
That sells to, you know, the list of customers that you see on the top, the Travis Perkins, the Wolseley of this world, you know, big wholesale, sales activity. If you look in the U.K., the U.K. has approximately 7,700 branches across the country. We are represented in 93% of those branches. That means we've got an enormous reach to our customers, and you basically can find our product on every street corner. I think it's fair to say that based on the history and the quality and the reputation that the product has built over the last 60 years, that most of our distributors consider us as a must-have product in their range, and hence we get to the 93% coverage. The other channel that we have in the UK is actually what we call our specialty sales.
They are actually handling, you know, the customers that you see on the top, on the right-hand side. More of the OEM customers, both in the plumbing and heating side, like the Baxi of this world, and in the, on the FluidTech side, like the Intelsius of this world. The reason we split that up is that if you look at specialty sales and if you look at OEMs, it's a different, you know, type of sale. It's much more a specification sales. It's much more a support sales compared to the big plumbing and heating. We didn't want that piece of the business to get, you know, overwhelmed by the large wholesale numbers, okay? It's an important piece for us. It allows us to kind of like specify our product and make sure that we are represented well.
If you look at in continental Europe, we have more a country organization, and over the last years, we've gone through taking them away as P&Ls and making them more one of sales organization throughout Europe. As we said, we sell more to OEMs there because the majority of what we sell is actually in the FluidTech business categories. The only new name that we have on there is Hornbach, which is a large cross-European retailer, where we started to put on our European SharkBite into their shelves. That's, for me, a good segue to move into the next page, which is our NPDs.
Before I take you to some of the examples, I mean, we in fiscal year 2022, we did more than 200 new SKUs across Europe, you know, in our ranges. We do that either to do a range extension, we do that to open a new market, or we do that to actually protect what we have and bring in new features to products that we are already supplying. If I give you a couple of the examples that you see here on the page on the right top side, you see our new underfloor heating system. As I said before, we actually sell underfloor heating in the new build market, but our systems were actually too big and too heavy to be in the remodel market.
We've been able to, you know, make that a different, what we call flat lay system that is much more easy to use in the remodeling market. From that point of view, we can now also sell our underfloor heating in that segment that we were excluded from before. Next to that, you see our European SharkBite. What I just said is we've put a range of 55 new SKUs into a Pan-European retailer called Hornbach. Obviously, we used a lot of the knowledge both in Australia as well as in the U.S. on SharkBite in order to get that to market more quickly than we could have done on our own.
Fully on the left-hand side, you'll see on the top left-hand side a video on that later on. It is our first valve development actually for the continental European organization. It's a valve that is developed in Australia for our French market. We're starting to get some traction with our valves also in continental Europe. Finally, on the bottom on the left-hand side, a full new range of our blown fiber connectors. You know, it's a very different market. You know, if you wanna be really creative, we say it's not something that moves water but keeps water out. It is actually used to connect fiber optics that are being put in the ground everywhere.
It's a very differentiating product because it's the only product that you can put in the ground without having to have channels around it. You can do it, what we call direct bury. It's got such a high impact resistance that you don't need to protect it. On top of that, it's transparent, so you can see that the connection between the fibers that you blow through is actually happening. That is just, you know, kinda like a small flavor of what we do from an MPD point of view. With that, I'd like to hand it over to Kevin.
Actually, if you wouldn't mind putting that over there. Good morning, ladies and gentlemen. My name is Kevin Buckner. I am the Chief Commercial Officer for the Americas. We're gonna start this morning. Oh, we've already have it, the slide move. I'm gonna give you the lay of the land of the Americas business. First and foremost, right there in the center of the page, we are a branded manufacturer, a manufacturer of branded products. Our brands are trusted and well known in the American marketplace. Now, when I say trusted and well known, go all the way out to the end user plumber, trusted brands by that end user, then come back up the food chain to the folks that are in the middle, our customers, direct customers, trusted brand names.
They trust putting that brand name on their shelf, and they trust their customer, which is our end user, coming in and seeing that brand, trusting that brand, and picking it up. We are a company that is known by its brands. Let's talk about our diversified product portfolio. We have a very nicely diversified product portfolio. You'll see the gray slice of the pie there, EZ-FLO. Now, with the acquisition very recently of EZ-FLO has further diversified that with a suite of products that they bring to us, with appliance connectors leading the way, being the biggest piece of that. A couple call-outs here that you may not be familiar with. You see on the top right of the category mix, integrated installation solutions.
That's how we refer to our HoldRite portfolio of product. That's kind of our internal nomenclature. Fluid Tech, interestingly is our John Guest brand product here in the United States, and that goes out into a Fluid Tech type of industry and application. Speaking just a little bit about the end markets there, the 60/20/20, so repair, remodel, and new construction. Repair of course, as we've already said, being the biggest piece of that pie. When you get into repair, it's anything from just a very small leak repair, could be with a small plumber, one truck plumber. It could be a water heater installation for someone who has to have a new water heater in an existing home.
There's a lot that kind of goes into and lives into that repair section. Remodel is kind of the same way. It could be a relatively small remodel, could be a larger remodel. As you look at these end markets, think about the end user. Smaller one truck plumbers, five truck, 10 truck plumbers, you know, as the plumbing contractor gets larger. There's a lot of sort of segments of end users that are in each of those slices of the pie. Then new construction, we're gonna talk a little bit more about that as I go forward. You know, there's really every type of new construction. We're very focused on commercial, residential new construction, which we're gonna talk more about, but that would include single family residential as well.
Talking a little bit just quickly about the channel mix. No surprises there, I'm sure for any of you in terms of, for instance, retail and wholesale being our two largest segments that we go to market here in the United States. On the bottom left, more than 23,000 locations, that is a real number. We are everywhere. I shared with someone last night that there's more locations where you can find RWC product than you can find McDonald's hamburgers in the United States. That's a lot.
as Andrew touched on with the extensive distribution network that we have here puts us very close to our customers, allows us to service our customers really well by being out there and being close to them, especially in any of those markets, our channels of distribution that might be a little bit more fragmented and have lots of points of receipt. I don't wanna leave out the far right there, our China manufacturing, which is new and is gonna get talked about later that has now come to us through the EZ-FLO acquisition. let's talk about our main channels of distribution. a little bit of a drill down here. again, retail and wholesale being those two largest pieces of the pie.
The thing to know here is that the customers that you are seeing here on the screen, these are the largest customers. These are the ones that we partner most closely with, but of course, we are selling everyone. There is not anyone who is in this business that we are in who we do not sell. We go down, you know, all the way down, cascading down to very, even very small customers. But what you see up here for each of these channels is these are the elites. RWC has the wherewithal and the knowledge and expertise to deal with these customers, many of whom are some of the most sophisticated retailers, not just in the United States, but across the globe.
That's also to say the expectations are extremely high and in servicing these customers, we do a very good job at it. An example of that is that we could show you a long list of Supplier of the Year awards that we have won very recently, just in the last three years of probably upwards of ten awards across the channel. For every channel that you are seeing here, we in the last three years have won a Supplier of the Year award. Part of that is to say to the supplier, for the company, the retailer distributor to say to the supplier, RWC, "You're doing a wonderful job.
You're doing better than others." I think it's also intended to say to the rest of their suppliers, "This is how you need to behave, and this is how you need to partner with us." We are a great example out there in the industry of how to perform. Let me call out OEM, a really interesting channel and one that has grown now with the three acquisitions that we've made over the last five years. Historically for us, working with the large water heater manufacturers with our temperature and pressure valves, which is critical to that componentry and the safety of a tank water heater. That's pretty much in our DNA. Then with the acquisition of John Guest four years ago, took us out into, for instance, a lot of water filtration, Fluid Tech.
We have Culligan as the example there of a big OEM that we work with. Now with EZ-FLO, Electrolux are a global major appliance manufacturer. They have the EZ-FLO had built a very nice relationship with Electrolux in the U.S. in order for the products, the water connectors, electrical cords, et cetera, that get attached to their major appliances when they get installed. We sell to Electrolux, then Electrolux attaches that product as it goes out into the market. Let's talk a little bit about new products. New products, very simply, the lifeblood of our business. If we don't do this, we don't grow.
I will say that it is something that we do really well, and I'm not trying to, you know, one-up my colleague, but we, on average over the last two years, we've done 400 SKUs per year, so it's just a very big country. That's the explanation there. Let me break down the sort of types of new products that we do, and I'm gonna give you four different ones. The first one, which is probably the highest SKU count that we do, packaging configurations, and things of that nature. If it's in a one-pack and a pro is gonna prefer to have that in a six-pack, we're gonna make a six-pack, we're gonna find space for it on the shelf. We do a lot of that.
We optimize in that way because we see the data come back to us from the market, then we can see that there's something that we ought to get ahead of and change. Second one would be product improvements, which can be, you know, any real type of value add that you can think of, a feature, the way that a product is installed. We've got our product managers and our engineers are constantly thinking about that. We are, as a key principle of all this, we are constantly have our eyes and ears on our end users. Not to ignore our middle sort of customer, but we're really most curious about what's happening with the end user and what they're telling us and what we should do.
Internally, we're also really good at looking at our product lines and understanding from a manufacturing basis, from a continuous improvement basis, is there an opportunity to take cost out? We're always looking at those two things. That's the second one. The third one is we have the ability to source product. We see an opportunity in the market, and we've got to get there quickly, and we're not yet currently manufacturing that product, and maybe not even sourcing it, but it's something that's very close in to everything else that we do. We can run really fast, and now with a better footprint in China, even faster, and we can develop a source product. The fourth one, probably the most important of all, is innovation. Generally, a very long-term play in terms of understanding what is a need in the marketplace?
What is a gap in the marketplace that we could fill? How can we innovate in order to take advantage of that opportunity? Those are the four kind of pillars of how we think about new products. How does that happen? I talked about customer and end user. You know, it's really new product development in terms of how we get out there and we listen to the market. Very multifaceted. We do it from a sort of scientific research standpoint a lot. We also pride ourselves on being on the job site.
We have an entire sales team where their responsibility is to be on job sites every day, and they are listening and they are gathering information and they are talking back to their colleagues, product managers and engineers, and marketing folks to understand what we ought to be doing. I will say, and I won't go into going across all our functions, but there's many functions of the organization that are involved in this effort, and every one of them plays a very significant role, very important role, and we're well equipped to do it. How do we do it? Well, execution, process and execution are extremely important in developing new product. We have a really robust stage gate process that we have developed and that we utilize really well. Our internal nomenclature for that is called Launchpad.
We are launching our products through Launchpad. That is, I won't go into any of the products here that you're seeing on the screen, but that is kind of a good overview just of sort of how we think about it. I think that takes us to Q&A.
Wow.
Hi, just a quick one on the EMEA region. I think in the UK in particular, you said it was about 75%, repair and remodel. Do you have a sense of the split within that of repair versus remodel?
I think we are mostly in what we call remodel. It's also, you know, how you wanna quantify that, right? How big does a job need to be before you call it a remodel compared to repair? I think it's a little bit arbitrary. You know, we can look at both of them together. I think we are predominantly in remodel.
Then just again that same pie chart, does the new product launches, I'm thinking the underfloor heating in particular, will that meaningfully, do you think, move that 75/25 over, say, a couple of years?
It will be in the % ranges. It will not be able to change that, you know, to 80/20 or something. You know, if you look at the size of the market, because the volume revenue on the fitting Speedfit side is significantly larger than any other thing that we do.
Hi, Edwin. While you're up there, might ask you about your SKU count. The 200 that you introduced into the market last year, can you give us a sense of what the base level of SKUs in the business is? What are the active SKUs that you're selling and what does that 200 represent in some measure?
Yeah, I think we have about 2,000 active, predominantly selling SKUs, but we have many more not kinda like you know have less of attraction. I think you saw on the and you'll see later on on the FluidTech side, we have about 1,400 and about kinda like 900 on the Speedfit side, really active SKUs.
Okay. Same question for Kevin for the U.S.
Yeah. Sorry, if you could just restate?
Just the 400 SKUs, which you so kindly said was about double-
Yes.
What Edwin de Wolf is doing. Can you give us a sense of how many active SKUs in the U.S.?
How many active SKUs? Yeah. I mean, we're well into the thousands. Yeah. We have a lot of SKUs and, yeah. Clearly 400 is new and, you know, that's on top of thousands of SKUs. Yeah.
Would your base SKUs be what? 4 or 5 thousand? If we're running at the same rate as-
I'm probably gonna let my supply chain colleagues answer that. Yeah, it would be in that range. Yes.
Okay. Andrew, just maybe either yourself or Kevin talking about growth in new products where you're expanding. There was a slide in there that talked about, you know, filling the plumber's truck. Can you give us a sense of which part of the plumber's truck, you know, are we talking about? Would you go so far as saying, you know, expanding in front of the wall products? Not necessarily in the design elements, but the more technically focused products.
Yeah. I would say in terms of what part of the truck behind the steering wheel would be the part that we would wanna cover. Strictly behind the wall, valves, fittings, pipe. I don't have any more hair left, but to get into fashion is just not a business. We'll stay behind the wall.
Yeah. We're just coming off the wall if we're connecting.
Mm-hmm.
You know, you'll have outside, you'll have supply stops, technically, you know, on the side of the wall. Now with EZ-FLO, with connectors coming, you know, to an appliance. To Andrew's point, behind the wall.
anything outside of pipes with fittings and valves?
Yeah, I'm not sure I understand your question in terms of.
Just in terms of the product categories. Would you expand beyond pipes, fittings and valves?
Pipes, fittings and valves. We don't necessarily get into and drill down into every type of product. This afternoon when you get to the trade center, you're gonna get a better sense of that. EZ-FLO has now brought us even more diversification 'cause I didn't mention even some of the things that they're doing in appliance installation. It's water connectors, it's gas, it's electrical cords, it's venting for clothes dryers. Yeah, there's depending on, you know, which segment you're talking about, it can get pretty deep.
Okay. Thank you.
Yeah. Just over here. Thanks. Just had a question on the Americas end markets, but I suppose given sometimes the difficulty of visibility of sales to the end customer, just kind of how you get confidence on that split of 60% repair versus the remodel and new build.
Yeah. That's a good question. It takes a lot of data points to kind of roll that together. We've got certainly, you know, syndicated data that we can pull in. We have, you know, the understanding the types of customers that we're selling to. As I've mentioned, we are very focused on job sites and commercial new construction, multifamily, residential, high-rise residential. Based on that, you know, kind of triangulating with all the data that we have access to, we're able to make those estimates.
I just have two questions about the plumber's truck. I haven't seen it in detail myself, so I probably need a bit of a guidance. I think you briefly touched a bit on it when Keith was asking the question. Can you be a bit more specific on what part of the plumber's truck, what products that we are not yet selling or kind of in terms of broad categories? And then secondly, is there much of a difference in the plumber's truck in North America versus EMEA? You know, is there or are they all the same? Or
First of all, the first part of my answer is not intended to avoid your question, but it does depend. On the type of plumber and on the focus of their business. You could look right here, even just in Atlanta, there's gonna be plumbers who are gonna be highly focused on just doing water heater installation, so that you're gonna open the doors behind that truck, and you're gonna see a suite of products that's very targeted to that. You're gonna have somebody who's very, very general in their plumbing, but very repair-focused, that's gonna have its suite of products.
Even to talk about a handyman type of person who's gonna be, for instance, going into a Lowe's or Home Depot, may not have much at all on the truck because they may do plumbing one week and then not do it for, you know, three more weeks. It really does depend who that end user is. I won't go off into commercial world because then that becomes different altogether.
Can I just add, Trapezoid of doom. Can I just add one point to that? The other way to think about the plumber's truck is to think about the aisle in a Lowe's store or a Home Depot store. Ultimately, what's on all those racks ends up in the truck, which ends up getting installed. That, for me, is actually a bit of an easier visual than trying to picture the plumber's truck and where on the truck it is. It does vary depending on the nature of the work they do, but it's extensive. I would eliminate from that, though, the fashion stuff that we talked about before.
Also, I'd say, if you like, the capital item, so the boiler or the water heater is sort of a thing that's purchased for the job. But everything else that's needed every day by that plumber to install that capital item or install that fashion plumbing, that I think is within our purview.
Edwin, just in terms of what's happening in the EU, the broader EU and UK cost environment, from a strategic perspective, do you see that playing into you from an opportunity perspective? Your cost base relative to alternatives, I'm not talking about your direct peers, but alternatives. Is that playing to some degree of strength, relatively? Or is it potentially a weakness there?
In Europe, you know, we're all faced with the same cost of utilities, you know, pressures. I don't think that's any different for us than anybody else. I think we, you know, relatively don't use that much of utilities compared to others, but I think, you know, others are in the same position. I don't see it kinda, you know, playing more negatively to us or extremely more positive.
Mm.
I think we're all facing the same thing. I don't see it getting.
Even outside Wavin and Aliaxis. I'm thinking about the broader plumbing landscape substitutes as well.
No, I don't think that will drive, you know.
Okay.
A different substitution.
Gotcha.
I really don't think so.
Just a second question around the UK and their housing specifications around energy, probably gonna ramp up. What further opportunities do you see as a consequence of that, and how far will it take you? Obviously in the context of underfloor heating, there's a few things, but.
Yeah.
Yeah.
Well, obviously, the UK will follow what we see in the rest of Europe. That, you know, there's a transformation of not having, you know, gas in houses anymore, and therefore, moving into, you know, heat pumps as the most likely alternative. There's some other things that are being looked at with hydrogen and stuff like that, but I think heat pumps. If you look at the rest of Europe, if you look at my home country, the Netherlands, that is already, you know, mandated. Last year, there's no new houses being built, you know, where that is not forced to be or forced where it's. There's no gas, so you need to use the heat pumps.
The heating is being done through the heat pumps, and the majority is then underfloor heating. No more radiators and stuff like that in the houses. I think that's gonna change. With the heat pumps, you'll need different products to, you know, regulate it, different type of valves, which opens an opportunity for us.
Gotcha. Thanks.
I think that's just back on that issue of sustainability. I mean, as the world moves to more complicated systems, heat pump systems and so on, I think there's definitely an opportunity there from a controls point of view. The other aspect is I'd rather be in plastic piping than copper piping. I mean, from a heat loss point of view, plastic's a whole lot better. I think that's a nice opportunity for the future as well.
Kevin, just wanted to ask, do you have any line of sight to the net exposure of the OEM channel? One, R&R versus new hire, but also as a lead indicator, given Andrew's commentary earlier about seeing a bit of difference in demand in that channel versus retail.
In terms of the OEM equipment that sort of their trends level added to the market?
Well, who they sell to and whether we can use that as any kind of lead indicator.
Yeah, I'm not gonna suggest that we would really have much visibility into who they are selling to. Yeah, we're not receiving that data on the other side. Really just our shipments going in into the OEM. You know, yeah, that would be difficult to understand because we wouldn't know, for instance, if they were maybe building inventory or, you know. That would be a difficult one to get at.
Certainly on a day-by-day basis or a point-in-time basis, it's difficult to know exactly where they're at in their cycle. If you step back, though, and look at where they end up, there's, depending on the year, between 8-10 million water heaters sold a year. If you look at how many new houses are built, then that puts it at the sort of 15%, maybe 20% mark is going to new construction, which means the bulk of it's going to repair and maintenance, which actually mirrors where we're at. It's essentially the same end user base and same ultimate location, so.
When we get into leading indicators and so on, after the section after this, we're going to get into a little bit of that. We'll hold off till then, so.
Over here, Pete Wilson. It can be a little bit hard to gauge the potential of your new products, just given there are so many SKUs. I wanna ask of each of you is what you're rolling out now, is this an exceptional year for new products, or is it more typical what you'd expect, so year in, year out? Specifically for Edwin, I was interested in the European SharkBite. What is the potential of that, and why is it a European SharkBite, not a John Guest Speedfit that's been rolled out?
Because in that retail market, based on the studies that we did with them, they really wanted a brass solution. That's just, you know, the market is different than the UK market, where everything is plastic. It's really different from continental Europe. That's just, you know, kinda trying to listen to the market and bring in the product that they want. What's the other piece of your question?
The other one, just a general comment, is the amount of products you're launching now, is this exceptional, or is it just a typical year in terms of your new products?
No, like I said, I mean, developing new products is what we do every day. You know, do we launch every year 200? Probably not, but you could have a year where you do more, and you could have a year where you do less. We're not striving for a certain number. It also depends on, you know, what type of, you know, new product that you're launching.
As Kevin gave the examples, you know, if it's something that is in a new bag or, you know, a different packaging, different amount in a bag, is very different than if you wanna launch something, like the whole blown fiber range that we did, where you gotta, you know, design the product, design the molds for it, then make sure you can automate it, go to customers, make sure that, you know, you get traction in the market. There's a very different time lag, I'd say, between the different new products that you launch.
Can I just-
So-
Just to maybe anchor that product question 'cause it's come up a few times. It certainly to reinforce, it didn't feel like an unusual year. Interesting for these two guys. Now Cameron's got me. Asia Pac actually did the most products of all three regions last year, so it was more than 400 just to sort of throw that in. That's it varies region by region, depending on the year. I mean, Asia Pac had a whole new generation of one product group that were 200 SKUs. That was the next generation incremental margin, incrementally better for the end user.
There was the one slide that Andrew showed about what drove our growth over the last since 2006, and the second one down was above market growth. That's what drives the above market growth. It's incremental above market growth driven by new ongoing product introductions and the brand and the execution. That's why we're able to get a little bit more than the market every year because of these ongoing improvements. A lot of it's range extension, minor additions. Some of it's small. This is pretty unglamorous. It's a new plastic bag or a new piece of packaging for an existing item, but that allows us to get into a new store or some new shelf space. That can be really profound, really fundamental some years down the track.
There was one product that there, which represents a much longer-term development, which was the blown fiber in the bottom left-hand corner of the EMEA page. That is the engineer in me just geeks out on that. That is an unbelievable innovation and technology there that took many years to come up with. Okay? It's also not gonna move the needle until 5 or 6 or 7 or 8 years down the track because it's innovative, it's disruptive. It'll change the way the installer has to work. We need to be doing that. That needs to be. We need to periodically release that sort of stuff, but you can't bank it for a long time.
That combination of periodic major disruptions, innovations, combined with that ongoing incremental new product releases, it what gives us those two actual middle bars in that growth chart, so.
Two really good examples that you're gonna see here today. One, just shortly in the presentation, we'll talk about gas connectors and EZ-FLO. We're running really hard on that. We've got a little bit of a case study on that. Then when you get over to the training center, part of what you're gonna get taken through is our retail laboratory, and you're gonna sort of see visuals of the evolution of just The Home Depot, and that'll make that really come to life.
Hey, we got the time's up. Oh, sorry.
Just quickly, can you maybe talk to the percentage of NPD that's internally generated versus requested of you by an OEM or a retail partner?
How do you differentiate them? I mean, at some point it all merges, doesn't it?
Yeah.
You know, those conversations that you have in the field, did they ask for it? Did we ask for it? Did we recognize it together at the same time? It's not clear to delineate.
All right. Thanks.
Can I just ask, in the Americas, the channel, the retail channel, you had Amazon up there. Can you just talk a little bit about, I guess, the materiality of Amazon, that online channel, how suitable your products are for sale there, and if there's any difference in economics selling through Amazon?
Less than the other two. I don't wanna sort of split down.
Yeah.
It's growing and will continue to grow, but the first two there were pretty important. That's really as much granularity I wanna throw out, to be honest.
Yeah.
Okay. All right. Shift gears here. All right. For the next section, we're kinda moving through our story here. We've hit our purpose, we've talked about our foundation, and now we're gonna talk about strategy. With me today to help tell that story is mostly some of our top operational minds, which I think speaks a little bit to what we wanna do today, which is really bring to life the focus that we have with our strategy and how it really is played out day in, day out throughout our operation. You know, for those of you who have followed RWC over the years, hopefully much of what we're gonna talk about feels very familiar. You know, we've really worked to improve the way we articulate it.
A lot of that is for our own internal purposes. We wanna drive a lot of focus and energy across our organization, and what we're gonna show to you today is really, you know, that coming to life. It starts with product leadership, which you've heard a lot about today already. The first pillar of our strategy is our focus on solutions for the job site. As our team has shared already in quite a few examples and will continue to share through the day, you know, we really focus on solving real-world problems for the end user. Products that are easier, faster, and more dependable for the plumber. We've got a tremendous legacy of brands like y'all are well familiar with.
The last point on this one is that there's just so much energy that you feel across our organization because this is innovation, this is thinking about the future. This is us being a leader, a very visible leader in the marketplace. This second pillar, which really was foreshadowed quite well in the last section, is the value we bring for our channel partners. Like Kevin touched on, we work with many of the leading channel partners across the globe, and their expectations are high. That is opportunity for us because we believe that we can outperform our competition and deliver a higher level of service for those channel partners. A lot of that comes down to thoughtful partnering.
We're really thinking about their business and how we can solve problems for them and ultimately just putting more value on their shelf. The third pillar is our industry-leading execution. We're actually gonna spend a bit more time here during this section talking about that third pillar, really bringing that to life. Like Keith mentioned, I think kinda right out of the gate, we've never stopped investing in the business. In spite of a couple of very challenging years from a supply chain and operation standpoint, where we have delivered at an incredibly high level, we have also continued to invest in our business, setting ourselves up for what's to come. I will note that, later this afternoon, we're really gonna bring these first two pillars to life through show and tell.
Actually get to meet more of our people, see the products, see how they work, and see importantly, how they're differentiated from what else is out there in the market. Another thing we're gonna do here is we're gonna share a few videos. I'm gonna start with the first one now, which hits our first pillar, solutions for the job site. What you will see is a global team, Eric, who's from the U.K., Abhishek from Australia, and then Damien and Samir from our French team. They're gonna share with us very quickly a recent project they've been working on for the French market.
We have a strong focus here in France on producing innovative technology that appeals to our end users. We want to create bespoke solutions to meet current customer demand, giving us an edge that competitors can't touch. The new TMV is very well designed, high performance and easy to use. It perfectly fits French market demand. It improves our customers planning installations and make them safer for the final user.
Samir contacted me because he had an OEM customer who was interested in developing a new product. He was looking for better performance. He was looking for better options, better connection formats. It was pretty clear to us that we could do a better job.
This project required three key regions to come together seamlessly to ensure a successful delivery.
We had to overcome a lot of hurdles, including testing and certifications, to bring the valve to the marketplace.
The specifications provided by Samir and his team required us to come up with a solution that provided high performance at a very competitive price. The product needed to meet all the local requirements of France to compete against established competitors.
The NPD team was helping with compliance, with the technical specification to help the other divisions develop products that are suitable for their markets.
The final design combined new and existing technologies to create a unique solution that forms the base for future iterations, allowing expansion into continental Europe.
Continental Europe is always in mind when we think about new product opportunities to sell our customers, enhancing the job site and simplifying the work for our end users.
In addition to the design work, our team established new supply chain relationships to ensure this product could be manufactured to specification and in the timeframe we needed. Assembly and production facilities were updated to suit the modified valve footprint. The approval process for the region had not previously been undertaken, and we had to work closely with the teams in the U.K. and France to bring this product to life.
We are global manufacturers. It's important that we think this way about everything. We can call anyone across our global network. We are all colleagues. Together, we make it all possible.
Very good. Now I'm gonna hand it over to Kevin, who's gonna share another case study from HoldRite and what that opens up for us here in the U.S.
Very good. Thank you. Five years ago today, you would have found us very early on in our integration of the HoldRite organization. What did HoldRite do for RWC? I'm gonna start with sort of one of the most high-level aspects of that, which is it took us, first of all, into a completely different arena. I've talked a little bit about already, commercial new construction, combination of multifamily, high-rise residential.
One of the really unique dynamics that are in that market is that we have the ability to be out all the way at the project site, end user site, building that demand, generating that demand, following that demand all the way to the sale, and then 100% of that product is pulled through our established distribution channels. That's a really great dynamic, and we have a really great team that works on that effort, both on the demand generation side at the job site and then also on distribution as well. You can see from the products that are listed here, and this is certainly not everything that's shown, but these are key patented innovations, which is a big part of how we go out and we service and we show up and service these very sophisticated plumbers.
I won't go do a deep dive and on the follow on to the question that I answered earlier in terms of the type of plumber, but these are your largest plumbing contractors, your most sophisticated plumbing contractors. These are engineer level folks that we're dealing with, and a lot of decision makers and influencers that live in that channel. Over the five years, we have really built up our capabilities and scaled our capabilities to go out into this market, to drive this market and service this market and pulling more and more product through the channel. The phases that you're seeing up here are the phases of a typical build, commercial new construction build.
We are involved well ahead of any dirt being moved on a project site, of, you know, year or years prior to that in terms of working with developers, specifiers, engineers, et cetera. We, with the product catalog that we have, we are able to sell into each of the phases of the build, and that continues to expand. A good example is our EZ-FLO products that have now joined the portfolio and can show up there in what we call a top out or, you know, when the appliances are being put in, when the sinks are being put in, and things are being connected as, for instance, with water connectors, with gas connectors, et cetera.
Great. Thanks, Kevin. All right, so now we're gonna shift to this second pillar, value for the distributor. To continue to showcase our amazing global team, we're gonna hear from Pei and Clayton, who are gonna talk a little bit about how we work with Lowe's and Home Depot.
Once we get into a bay, that's where we really add value as a supplier. For us, that's really where the work starts.
We know that getting product on the shelves is very important, but we take it a step further.
We as an organization are willing to step up and do things that other competitors are not. Like air freight product from Australia to Cullman during a freeze where customers have a disaster and need SharkBite product to get their water back on. That could mean when the COVID pandemic hit and we saw demand go through the roof, stepping up our supply chain and making sure we're getting enough product in to keep our customers in stock for their end users. One of the things we really pride ourselves on as a supplier is listening to the customer. We then take that information and find ways to improve.
Everything we do is very meticulous. We are very focused on the customer and doing what is right for them. A lot of analysis and thought process goes into that. Our journey started with Home Depot over 10 years ago. In the last 10 years, we've expanded to now an entire bay of product of push-to-connect. We've also, at this point, expanded to the entire plumbing aisle from our pipe supports to John Guest to water heaters. We kind of play in every single one of the bays in plumbing.
For brand awareness, it's been huge for us to partner with Lowe's. We've got product in over 12 bays in the plumbing department. As you walk down the plumbing aisles, you see the SharkBite brand everywhere, which is huge for customer recognition. We continue to iterate and improve on packaging, signage, how we color code things by size, the amount of space we allocate to a particular product.
Fighting for the space, getting more space, having our customers give us the space because they trust us is what's driving a lot of the innovation and the bottom line sales.
We've continued to drive innovation by continuing to expand our product lines. That might mean adding additional SharkBite fittings to the range. We've expanded through acquisition with companies like Eastman and HoldRite, and that's allowed us to get into more bays with more product. We don't find ourselves in many product line reviews because we're making changes to our bay, constantly pushing ourselves, even when our customers are not coming to us saying, "Hey, we need you to make a change," or, "There's a problem with what we're doing here.
A real quick note on that, when you saw some pictures of actually our training center that's across the parking lot, which is what you're gonna see this afternoon, just you to see what these bays look like and how we use them to problem solve with our channel partners. So we get to see that in real life. Kevin?
Very good. Thank you. 12 bays of product, that doesn't happen by accident, and you have to be, plumbing has to really make a difference, and it does for a large retailer. Plumbing is a magnet for who they are trying to attract. For the pros that Home Depot has and wants to have, and for the pros that Lowe's has and wants to have, they need to have that attraction. And plumbing makes a big difference, and plumbing makes a lot of money for the retailers. There are bays across plumbing that from a sort of retail profitability standpoint are some of the highest across the store. It probably doesn't beat paint, but you know, some of the highest across the store.
Let me talk a little bit about what's on the slide here, focusing on EZ-FLO, delivering value. I wanna tell you a real quick story, which is a really clear illustration of the value that EZ-FLO acquisition brought to RWC. Very coincidentally, I was at a meeting with one of our large retailers, 26th October 2021, the day of the announcement of the acquisition. By the time we got there in the afternoon, they were already aware of what was happening. They kinda beat us to the punch on that. We had our meeting. We were in a store, having a meeting in a store, which we often do.
Right as that portion of the meeting closed, the senior merchant took me over to a bay and where there was a small amount of participation, and he said, "I think EZ-FLO can really participate in this bay in a very big way. Can we do that?" The answer was yes. Since that time, we have been running very, very fast in executing programs, building SKUs, et cetera. Really good illustration of how it was very immediate. EZ-FLO acquisition brought two new pro brands to us, and not just brands, but what we need, which are pro brands that the pro knows, brands that the pros are gonna be attracted to, brands that the retailers are gonna know will attract the pro into their store and to the shelf.
We add two new product categories, core product categories, appliance connectors, a very large portion of the EZ-FLO portfolio, and then gas connectors, which is very much up and coming. I'll talk a little bit more in detail about that later. Then in terms of channel penetration, so the value that RWC brought then to EZ-FLO in terms of getting it under the umbrella is our strength in retail and wholesale channels. As you saw how large slices of the pie that was earlier in the presentation.
You know, the sort of under-penetration, if you will, of some of the products that they had in those two channels, we were able to immediately, thus my illustration at retail, to be able to use that leverage and run very quickly and get additional penetration in channels where we have our biggest strengths.
Great. Thanks, Kevin. All right, now we turn to the third pillar. We've got a few case studies that our team's gonna take you through. Before we go there, we've got one more video, and here we're gonna hear from our team in the UK, and they're gonna talk about some of the important investments we're making to become every day a more efficient manufacturer.
Launceston is a relatively new site based here in the southwest of England in the county of Cornwall. We sit between two areas of outstanding natural beauty, and it's important to us that we played our part in maintaining the environment. With this site, we're setting a strong example. Energy was a big consideration during its development. The building also incorporates other leading-edge solutions, such as RWC underfloor heating and digitally addressable lighting, which permits us to reduce the lighting during the daylight hours.
It's nice to see the solar panels and the digital light system that reduce our energy consumption. Growing up in Cornwall, it's always been a beautiful place to live, and it's really nice to work for a company that do everything they can to maintain and sustain that environment. The new machinery cuts down on our electricity usage, but also ups production. It's just fantastic to see.
There are many benefits to the installation of the ENGEL molding machine. These machines save us up to 66% of energy against our aging machines prior to installation. We undertook a trial using three mainstream injection molding manufacturers and scored them against six key process indicators. We tested energy use, tool spacing, operator interface, reliability, footprint, and cycle time. The selection of the ENGEL machine allows us in the U.K. to develop processes that then can be exported throughout RWC globally.
We started off, we wanted to get the machines in and up and running as soon as possible, so we developed the uni-modular strut system that runs all the services to the machines. We looked at tooling and what was required to run with the machines and to make everything work, and made sure we had all of this in place ready for when the machines was delivered. Due to all the work and the production team and that behind the scenes, we managed to get the machines up and running within two days of delivery.
The new molding machine is fantastic because it has no tie bars, you can get in larger tooling, it has better process optimization, it's more energy efficient. The repeatability and consistency has been improved. We can load the settings on any machine and put them in any machine. They'll work anywhere from the start. The interface is incredibly easy to use with features that weren't available on the older machines. It's easier to control and easier to monitor, full stop.
These machines have servo hydraulic variable displacement pumps, which creates a large amount of energy saving, particularly through the cooling phase, where the pump slows down as there is no oil required. The improved quality and quality monitoring allows us to meet our customer demands much more efficiently.
Very good. All right. Now I'm gonna hand it off to Andrea to share with us some more of the kinda operational side of the benefits that came along with our acquisition of EZ-FLO.
Okay.
Andrea.
Good morning. I'm Andrea Hill. I'm VP of Supply Chain for the Americas, and I'm gonna talk for a minute about the EZ-FLO Eastman acquisition, one of the things that we gained, and that was a manufacturing facility in Ningbo, China. Two key things that we're gonna point out about this location, one is the manufacturing capabilities that it has provided us. It gives us the opportunity to have manufacturing for water heater connectors as well as appliance connectors. Now, this facility was a really good facility that we've acquired, but we are beginning that process of moving into a stage of operational excellence as we integrate it into the RWC family.
To date, we've already seen increased manufacturing efficiencies through lean manufacturing principles and Kaizen events. We're seeing yielding reduced work in progress inventories through those lean manufacturing processes and what we refer to as leveled scheduling. The manufacturing cost reductions are being achieved, and we are benchmarking with comparable Chinese manufacturing already. These are great achievements we're seeing already, but we still have more to come. We have investment in automation for the facility, as well as continued manufacturing cost improvements, which is gonna give us a competitive pricing on these items that we manufacture from this location. We're gonna continue to roll out operational excellence at this facility, which is gonna continue to build the capabilities at this location. While we have gained a valuable asset, we're gonna continue to make it better at this location.
Another important piece of this location in Ningbo is that it's located in the FTZ, or Free Trade Zone. What does this give us? It gives us the opportunity really to be able to have sourcing through this facility and improve our logistics capabilities. The free trade zone allows us to have tariff management, very effective tariff management, as well as shipping consolidation. Today in this location where we purchase, acquire product in this region of China, we're able to bring it into the free trade zone, consolidate it, and then move it into our facilities in the United States. In addition, we're well-positioned within the free trade zone area, and we have a good working relationship with them. This location has a proven track record of high volume container consolidation and shipments. Again, this is an added benefit for the RWC family.
As we move forward, some additional things that we're gonna gain, and this is really key for our business for RWC, we have the opportunity to explore further consolidations of items that we purchase in this key area in Ningbo, China. We also have commitment from the free trade zone authorities for growth and expansion. Our procurement collaboration across the regions, across all three regions, is already beginning so that we can leverage this facility for all of RWC, and we're enhancing the capabilities of the team, our purchasing processes and best practices within that team to drive further improvements. These are two key things that we would say have been enabled through the acquisition of Eastman EZ-FLO manufacturing capability for those new product categories, as well as logistics and sourcing capabilities. Dixon.
Thank you, Andrea. First up in the operational excellence category, we flagged up several things that underpin the pillar. Two main ones are lean manufacturing and strategic sourcing. I'm gonna go through a couple of real-world examples from the Americas that kind of bolster those goals and targets that we have. The first one in the strategic sourcing category, you know, Andrea also mentioned everything. When you first think of strategic sourcing, you think of, "Hey, can I take this to another vendor? Can I utilize multiple different vendors, get better pricing, better quality?" That's the first thing you think of. With the team in Ningbo to help the team in Coleman, to help the team in the U.K. and the team in APAC and the purchasing organizations, that is absolutely underway.
The flip side of strategic sourcing is, can we make it better than a third-party vendor? Can we make it cheaper? Can we shorten the supply chain? I mean, obviously, over the last couple of three years, the shortest, tightest supply chain is gonna be super efficient. A great example here in the yellow box over my shoulder is we have a range of plastic crimp fittings that we were buying from a third-party vendor. The team in Coleman started looking at it, looking at the design, saying, "Hey, can we do this better? We already have the injection molding capability within the plant.
Could we bring these fittings in-house?" We began doing the design, we began doing the review and looking at it and said, "Yeah, this is a really, really good cost savings, and this is a place where we can take that supply chain and shorten it down." A key to it, in injection molding, the absolute key, the most important thing is the tooling. Great news is that our friends in EMEA have a world-class tooling shop inside the factory. Inside John Guest, they develop and manufacture all their injection molding tooling. The US group was able to go work with the U.K. group, develop all of the tooling for all of the parts, run all of the parts in the U.K., pick the molds up, ship them to the U.S, run them on the exact same machines that are run in the U.K.
From the time they took the molds, they unbolted them, cleaned them up. By the time they had them in the machine, plugged all the numbers in that had been developed in the UK, they had parts, sellable good parts in two hours. Tremendously successful program. The second piece of the puzzle is lean manufacturing. Most people, immediately, when you think of lean, you think of people, as few people as possible. But really, lean goes beyond that. It's really more, I need more with less. Less floor space, less people, less resources, less time. I think most of y'all have been to the Coleman facility. You've seen the three SharkBite manufacturing lines that we have in the facility. Obviously, SharkBite has continued to grow, and we have needed additional capacity to support that growth.
Instead of just doing a copy-paste, so the three lines that we have now are all very similar. Instead of doing a copy-paste to a fourth line, which would've been the easy route, we challenged the Coleman team to look at it from the ground up. Can we get more? What they've come up with is both the two, the middle and the dark blue and the light blue, both are new equipment to support SharkBite growth. Those single pieces of equipment get double the output of the old equipment. Same floor space, same people, but a completely new concept in the line that doubled the output for a single piece of equipment. We're able to get more capacity with the same floor space and the same people. Two really, really good examples of this operational excellence.
Now I'll turn it over to Edwin.
All right. When I talked to you before, I said in West Drayton, next to the manufacturing, we have a center of excellence of engineering. If you look at that group, we basically develop, you know, and design the new products together with the sales team. Not just the product, we also design in-house the own tools, and then we design the assembly equipment that is needed to put the parts together. The engineering team also supports our manufacturing organization on a daily basis, and especially with the automation. I think those of you who have visited us in West Drayton, we are, I would say, space constrained, so the more that we can produce per square foot or per square meter, you know, is absolutely useful for us.
Why do we need to further automate? Is because we wanna have a higher output with an inline controlled quality check. We also wanna make sure that if we automate further, we circumvent the limitations in the local labor pool, which I think labor across the world is an issue at the moment at all levels. It allows us to you know upgrade the skills of our teams and have them do more added value work than they're doing today in some cases. It also makes us more flexible. The more I'm automated, the more I can scale up and scale down my manufacturing depending on demand. For us, it all starts with the molding, okay?
You saw in the video, we've actually upgraded one third of our overall machine park, not just in Launceston where you saw the example, but also in West Drayton. We started to use the different molding machines, saving enormous amount of energy, which obviously was already very useful previously. Given where we are today, is obviously given us even a higher return than what we anticipated. It is also important for us that we continue to increase our output. Just to put it in perspective, on the molding side, we mold every single day between 1 and 1.5 million collets per day. That's just one piece of a fitting. The vast amount of parts that we have to get through our facility is huge in order to to support our customer demand.
After the molding, we have the assembly. If you look at the machine on the middle of the page, it's for our shut-off valve product line, and actually that replaces two manual assembly lines with 12 operators on there. That allows us to redeploy those 12 people somewhere else, and allows us to produce much more on the same floor space. Dixon talked about the fact that we are making molds for the U.S. We're now also starting, and we are commissioning the first assembly machine, actually for our Australian colleagues. We're also starting to export that knowledge into the rest of the organization. We've been and will continue to invest in our business.
We invest approximately, you know, AUD 10 million every year on additional equipment, whether it's molding, whether it's assembly, whether it's tools, and that's something that we continue to do. As you can see from this, from the page, we've also been able to kinda create some real head space that allows us to further grow our business.
Very good. Thanks, Edwin.
Oh, you don't need that one anymore, do you?
Great. We'll break here for a few minutes to take any questions related to the topics we just covered before moving on.
How far do you think you're through the kind of automation journey, particularly in Europe?
Mm-hmm.
When you first bought John Guest and we went over there was clearly some upside from automation. I'm just trying to work out how much longer you've got and how far you are through that.
Good question. Edwin, you wanna grab that?
Yeah. I think obviously there is, we still have some work to do. As you saw on the page, we have a much higher, percentage of automation in our Speedfit range than we have in our FluidTech range still today. On the other hand, the amount of SKUs that you see on the FluidTech range is much larger than on the Speedfit range. Obviously, you need a certain throughput in order for the automation to be effective. I think we still have, I'd say, probably another, you know, four or five machines that we gotta put in place in order to, optimize that. I'd say, you know, another two years of that journey we definitely have ahead of us.
Okay, thank you.
This is probably gonna be a very difficult question to answer from the perspective that I'm curious around supply chain, in a normalized world, in the context of EZ-FLO having been added to the mix in your Ningbo position, particularly. Whether you think it's a dramatically more complex environment that you have to invest more heavily to manage from a systems and capability perspective, or whether Ningbo was a bit of a plug-and-play for you now? I'm really thinking about a normalized world as opposed to the current context.
Sure. No, I mean, I think we're working through the integration still, and part of that is systems. You know, like we're integrating our systems so that we have one platform that both the legacy RWC and the EZ-FLO, so that we all see and speak the same language. There's opportunity to continue to make that better, and we'll continue to improve on that. We do have the capability, I feel like after that is complete, to bring it in and let it enable us for a more efficient supply chain and sourcing capability from a logistics perspective.
Is there a different risk profile that you think about in how you think about mitigation of that risk profile?
In terms of the current supply chain?
Yeah. The current network and setup.
Yes. I mean, we're constantly evaluating that within our network, given the current supply chain.
Yes. Sorry, I'm thinking.
Longer term?
Yeah. The bigger picture. Is it a different risk profile for you?
I think it's a very good question. It's a really good tool at our disposal. It doesn't fundamentally change the proportion of our cost of goods that's coming from China. You know, it's moved it a bit, but it hasn't doubled it by any stretch of the imagination. It's a single digit change in the percentage exposure. I think it's going to allow us to look more closely at some of the things we're sourcing from China and making in that facility to assess whether we can bring it back in. Sometimes it's really hard to make that assessment if you're not actually making it yourself. I think there could be a transition from current vendors to there, ultimately back to our own facility.
I think there's certainly some of the higher volume stuff in Ningbo that I can really see coming to either, like, a Brisbane or a West Drayton or a Coleman facility. But I suspect there'd also be some things that we're currently manually assembling in say a West Drayton or a Brisbane that will probably end up there. That's a long-term view. I think it gives us more flexibility. It's given us, to your point, I think a little more exposure to China, but it hasn't fundamentally changed our profile by any stretch of the imagination. The short term is we've got to get our arms around it. You know, we've had two people now get to that facility, so two of our people dealt with the quarantine in China, which is a serious lockdown.
You don't even have a key to your room quarantine. They did that and got in that facility and were really well welcomed, but also they liked what they'd seen. We'd been working with some consultancies, consultant organizations over there to get in to look at it, first of all, from a health and safety point of view, and then from a lean manufacturing point of view. We kinda knew what we were walking into, but when we got there, as Andrea said, it's a pretty good facility, but there's also opportunities to improve. I think if you go two, three, four, five years down the track, how we're splitting the manufacturing around the world will be different based on it.
I'll leave it there.
Thanks. Just a question for Kevin on your share of shelf space in the retail channel, so in tool bays in Home Depot. Can you comment, are there any in either Home Depot or Lowe's, is there any, like, major initiatives that you'd care to call out? Anything like a range, you know, a trial of a whole new range or something like that? You know, kinda any major wins or losses in terms of shelf space?
Yeah. I don't think I can comment on share. The space kinda speaks for itself. You're gonna get a little bit more drilled down on that this afternoon when we get into the retail laboratory. What's being worked on? It really never stops. That is a constant process of what I'm just gonna refer to as optimization. Because one of the things that we focus on, one of our primary focuses is how do we better ourselves? One way to look at it is think about those bays as just real estate. That's real estate that we have a good degree of control over because we have all of it.
With the partnerships and the way that we work with the big customers is we're able to more easily bring our ideas to them and say, "Here's what we want to do," as opposed to maybe not being in a bay or not having complete control over that. Maybe the merchant has to say, "This is my vision." We have a good degree of control, which means that we just never stop that thought process of optimization of that real estate. We are pretty well obsessed with it. Yeah. That leads into the SKU counts as well.
All right. Thank you.
Andrea, maybe a question for you. There's a bullet point on the slide, which you'll have to pardon my ignorance, but it said consideration for additional consolidation center to include all RWC suppliers in China. Can you give us just a bit more detail and understanding of what that means?
Sure. Today, we buy product in that region from many different suppliers. Today, the way the EZ-FLO facility, the NRM facility, Ningbo facility is set up is that their purchases are consolidated into containers, full container loads versus an LTL container that comes into the United States. Does that make sense? Today, that's already existing for all of the business from Eastman EZ-FLO. We now have an opportunity, since they're in that free trade zone area, that we can additional purchases from the legacy RWC side, we can explore the opportunity to consolidate those as well. It's a benefit from a logistics transportation perspective inbound into the United States. Those are some of the things that we're gonna continue to explore as we move into the next year.
Okay, understood. Then just to follow on, just relating to some of the lean initiatives you're putting into the factory in Ningbo. Sounds like you've had some good early progress. Has it exceeded your expectations so far as to how the teams have responded there, from a lean manufacturing perspective?
I think absolutely. Yes. I mean, just after this last visit a few weeks ago, just seeing the progress they've made in the short amount of time with the direction that we're giving them. Like I said, it's a good facility, and we're making it better. Applying those operational excellence, lean manufacturing, all of those things, empowering our people there in the facility is gonna be a win for us.
Okay. An extension of that, do you know, based on what you've seen so far, do you think the benefits Reliance expected, you know, at the time of the acquisition, do you think you're tracking, you know, to the goals that were set? Or do you think, you know, there may be some additional benefits maybe a couple of years down the track?
Oh, ab-
Relative to.
To expectations.
Mm-hmm.
That's a good interjection. Thank you.
Thank you.
It looks like that wraps up this. We got one more.
Yeah, just interested in what percentage of your SKUs you make versus outsource? Then, you know, manufacturing more, has that been a material driver of margin in the past, and is there an opportunity to make more going forward?
Say again, you're saying what is the opportunity for us to insource?
Yeah.
As opposed to outsourcing? Look, I can't put a number on it or a percentage on it, but I think there's a lot of things that we're looking at a little bit more differently now than what we would've three years ago. Now, if you think about what the organizations had to deal with, the implementation of tariffs out of China, then the COVID impact, then tight supply chain, and then, you know, unilateral decision by one person ends up in a war in Europe, which none of us expected. That makes you look at your supply chain really differently. Things that in the past, we probably would have just said, you know, "Leave. It's fine. Leave it alone." I think we're looking at it afresh now, given that environment.
I think the one, Dixon, that you talked about, the crimp fittings is a really good example. Then when you get into it, you actually see the benefit that we can bring and some of the capabilities that we've got from now an acquisition that gives us skills that we didn't have or tools, capabilities we didn't have before. I think that the nature of our business now makes some of that more available to us, and the environment we're in probably brings it into focus more than previously. Okay. Yep, we'll wrap up this section. We'll hand it off to Will to talk about our opportunity to start looking a little bit forward and why we think we're really well-positioned for the future.
Well, good morning, everyone. For those I have not met, my name is Will Kilpatrick, and I'll be stepping in as the role of interim president here for the Americas. As Christopher mentioned, we'll shift gears a bit from the growth playbook strategy of the business and a bit more focus on the opportunity ahead of us and how in each of the key regions we operate, we're gonna capitalize on that opportunity. Let's see here. I guess I can go to the next slide. Which I'll just open up fully. So this is probably one of my favorite slides in this section in the sense that I think it encompasses a lot of what the business has ahead of it. The first piece there around a large fragmented landscape. Now this is critical.
We operate in a $20+ billion market globally in our key markets. That's primarily, if you kinda go back to the analogy of the plumber's truck, a majority of that $20 billion is that plumber's truck type spend. There's obviously some Fluid Tech type markets that sit in that, but the bulk, majority of that is our core plumbing and heating business, which is fantastic. If you think about where we sit today, call it 5%. I'd also argue probably less than 5% of that share. We own a very small portion of that truck. Now, there are some things in that truck that we're probably not gonna get into, that Heath mentioned, the capital type items, like a big water boiler, but there's a lot of opportunity within that broader truck for which we're not touching today.
You then couple that with this idea of a few large players. For us, that's exciting for two primary reasons. On the organic side, we believe there's a ton of opportunity for us to continue to take share from other competitors out there. It's a highly fragmented space. We've demonstrated our ability to operate and execute well for our distributors and our customers. We expect that we can continue to do that and take share from the fragmented players that exists out there. I think the flip of that then exists on the inorganic side. As we think about growth and taking more share, there's this fantastic opportunity to go out and acquire businesses like EZ-FLO, Eastman, HoldRite, John Guest.
As we move forward, that's something that we're actively looking at, and it just helps us capture that broader piece of the $20 billion share. Sitting underneath that idea of this large fragmented market is the enduring tailwinds. One of the items that we've discussed with you guys a lot previously is this idea of labor shortage. Obviously, it's a hot topic in today's broader macroeconomic environment, but this idea of labor shortage for us really applies to this idea that you have a large number of plumbers that are getting older, that are highly skilled, that are retiring, and there's a less inflow of new plumbers that are taking spots for those existing plumbers that are retiring. That has been exacerbated in the recent environment with just labor shortages making it even more difficult.
How that plays well for us is this idea of having a really innovative product that makes their life easier, that's simple for them to do. It makes their job faster so they can be more efficient and move forward. That's something that will continue to be a tailwind for us as we move forward, just given broader expectations of the trade within plumbing. The next item is on the aging homes. This is something I'll get into in a couple of slides. Very basic and simple concept here. We are an 80%, call it repair and remodel business, and as homes become older, there's needs for repairs and there's needs for remodel. We believe that that's something that in our key markets that will obviously continue to help support our business and the growth moving forward.
The last point in tailwinds is something that we're seeing globally around sustainability investments. We made a good mention earlier around in the UK, this idea of moving away from gas boilers to call it other sources of energy. That exists, whether it's in the UK, the US, a general push for more sustainable homes, more sustainable buildings. From our view, where we sit today, plumbing will be a key part of that in terms of just spend as these structures are essentially retrofitted for more sustainable living moving forward. This bottom section around differentiated proposition, this is something we've been hopefully hitting on a good bit today. At the end of the day, it's around creating that value through product leadership that we've hit on.
It's having the right brands and the right products that those plumbers need that help them save time. We believe that with our differentiated proposition, you think about the two items on top around the large fragmented landscape and the enduring tailwinds, we're very well positioned to continue to grow in the markets that we're competing in today. That's a nice little summary of this slide. I'm gonna shift to a couple three slides that gets back to an earlier point that Heath made in terms of a key takeaway for today. The resilience of our business in the face of short-term uncertainty, given our broad exposure on the repair and remodel side. We believe we're very well positioned just based on macro trends that are occurring there.
This first slide is a U.S.-based slide that compares the new starts from the housing perspective in the light blue line to the dark blue, which is the expenditure for R&R. Key takeaways here. Obviously, you see the new starts from a new construction perspective is quite volatile compared to the solid blue. Of note, when you look at what's charted here, it's roughly 26 years of data. Of those 26 years in the R&R side, you see, I think it's just four years where you have a flat to down type cycle. At the end of the day, it's a very steady growth rate through the cycle. That's something from a steady stable growth perspective, that's something our business we will be well positioned to capitalize on.
The next slide jumps a bit into the U.S., and you'll see two slides that look very similar, a U.S. and a U.K. view here coming up. Couple of key points that will apply to both pages. One is this idea, and it will kind of relate more to the remodel side of our business that we operate in. As home prices appreciate, you see a correlation over time that as people feel more comfortable with the price of their home, they're more comfortable spending money doing remodels on it. That's something that we're seeing, as has been very true over the last very much so over the last two years and has been true for quite a bit of time, and we're still seeing strength in that moving forward.
That's obviously helping the remodel side of the equation. The right side of the equation, which applies both to the U.S. and the U.K., is this idea of aging homes. Here in the U.S., we've built roughly 140 million homes. Over half of those homes are over 40 years old. What does that mean for us? One, those homes have issues that require repair. Sometimes those repairs turn into remodels when folks decide they might as well spend money to do a remodel. But for us, it's something that is clearly driving the repair and remodel side. You couple that with this idea of just home shortages in both the U.S. and the U.K.
People are investing in their homes to make them nicer because it's hard to go out and find a home at an affordable price that they can move into. This same story applies on the UK side in terms of just the remodel in the repair side. I think even on the UK side, you're seeing a bit greater. If you call it the 30+ million homes in the UK, you know, roughly 55% are over 50 years old.
Having been just a resident in the U.K. before moving back to the U.S., I lived firsthand what some of those older homes mean and the problems that they run into, particularly given not only in the U.K. you've got potable water, but you also have a lot of the heating systems are supported by water and through radiant or under floor heating. Let's see here. I think that covers those two slides on that. This is a nice summary slide, and we'll do a bit, and I'll hand off to Bart and Chris from a U.K. perspective or EMEA perspective, summarizing just where we're thinking about growth, how we take advantage of these opportunities.
I'm not gonna rehash ultimately what we said around this idea of product leadership, focusing on solutions for the job site, focusing on creating value for the distributor and operational excellence. That's key underpinning this. What does that mean for us here in the U.S.? I'll look at it in two big buckets. On the residential side, where we're very strong in the repair and remodel side, it's about what can we do to have more products in that truck? It's as simple as that. Products not only that they need, but products and brands that they want. We'll do that both organically and inorganically. The other side of the equation is on the commercial side, which Kevin mentioned earlier, which is called primarily for the most part, multi-residential, low-rise type buildings.
You know, that's an area where through the HoldRite acquisition, we've done a great job of having kinda that entry point with HoldRite, with both fire stopping, with TestRite. It gives us access to the job site. The idea there is how do we continue to push the rest of the products, the pipes, the fittings, the valves, the water heater accessories into those markets, and really grow. It's obviously a bit more, it's less penetrated than our kind of residential side on the repair and remodel piece, but it represents a great opportunity where there's a massive amount of focus for us, as an Americas business moving forward. I'll actually hand off now to Kevin to cover a bit of putting it into action on the gas connector side.
Thank you, Will. Gonna be fairly brief. The case study, I've mentioned this a little bit. We've talked about gas connectors quite a bit as we've gone through the presentation. A little bit of background. Gas connectors, the category, the product category comes to us from the EZ-FLO acquisition. EZ-FLO purchased the Eastman company back in 2000. EZ-FLO International, when they were a standalone company, had been in this product category for, you know, give, kinda sort of 20 years. They sourced product for most of that time. One of the key sort of sea changes, started in 2018, is that they brought that manufacturing in-house into the Ningbo facility and now are a prime manufacturer for gas connectors.
In order to really make a serious run at this category, that's what you have to do. They took that step in 2018. The other key element to win in this category is to have an excess flow valve that is required for a number of applications. It is required by a number of customers and a number of end user plumbers. EZ-FLO, RWC now has a patented excess flow valve, and that's pictured up here, referred to as ArmorBoost. You put all those elements together, in-house manufacturing, having the right product, being able to have capacity, being able to have the elements such as the patented excess flow valve, all makes a big difference. Where does RWC come in terms of this?
Right there in the middle, you can see the sort of under-penetration in the markets, in particular on the bottom on wholesale. Not that EZ-FLO wasn't doing a wonderful job and wasn't really building out this category really well, but they just did not historically have strength in the wholesale plumbing channel. RWC, it's in our DNA. We have a lot of opportunity, and it's not to ignore retail either, but we have a lot of opportunity in front of us. I'll talk about retail, which is inclusive of the hardware channel. There are in-store opportunities to be able to place product on the shelf in the big customers. Inside of sort of the retail envelope, there's also the appliance installation piece.
The major appliances that get sold through Lowe's and Home Depot, two of the top three major appliance sellers in the United States, has a lot of EZ-FLO product riding along with it to get to make that installation. That can be expanded and is being expanded. Gas connectors go back to sort of when EZ-FLO, you know, prior to acquisition. In that sort of installation route to market, they already had the water connections. They had electrical cords. There was dryer venting. There's a suite of product. Gas connectors participated through the source product, but not to the extent that it can now. It kind of builds out that catalog of product. I mentioned wholesale plumbing.
One thing you're gonna see when you go across the street this afternoon is these merchandisers that we place inside of small wholesale distributors. We have the ability, that's kind of, you know, talk about the retail real estate. That's kind of our wholesale shelf real estate that we have control over, and so we have the ability to drive EZ-FLO product onto our own merchandisers. Last thing I'll say, then I hand it over to Bart, is that when we see you here next year, we'll have some very different looking pie charts for you. This is a really exciting area for us.
Thank you, Kevin. EMEA growth priorities. We differentiate between plumbing and heating and fluid tech. Within plumbing and heating, the U.K. and continental Europe are in different stages of maturity. In RMI, the biggest part of our U.K. Plumbing and heating, our brands matter to the end user and to our distributors. We offer them the strongest support. Some examples to support their growing e-commerce, we provide them with the best set of digital assets coming from our new website or centralized in our product information database. About 1,500 times per month, we refer where to buy requests to our distributors. We cooperate with their marketing for brand exposure and driving demand back to the distributors.
Screwfix, for example, recognize this by displaying exclusively Speedfit fittings in their front of store displays.
Hey, Andrew.
Sorry. In Europe, we are expanding our range of SharkBite fittings in the retail, following the example of SharkBite in the U.S. and Speedfit in the U.K. The picture shows SharkBite bay at Hornbach. We are spending time at the job site listening to customers and end users, and developing products that drive value. Recent examples, and they have been mentioned before, are LoFit for the underfloor heating range and brand new controls for the underfloor heating. That shows how we deliver smart solutions that are the first choice for plumbers. In the commercial space, our specification pipeline continues to grow rapidly. To leverage this, we are preparing a launch for a large commercial range into the U.K. market.
Finally, in new builds, we benefit from our strength in underfloor heating, and we continue to expand our share and focus to unlock new build potential, preferably via M&A. FluidTech. FluidTech has a similar approach in U.K. And in continental Europe. We focus and continue to take share in five key applications, compressed air, drinks dispense, pure water, leisure and telecom, and product development there is incremental. Chris will explain more about the FluidTech case in the next slide.
Thank you, Bart. Okay. Folks, I wanted to really zone in now when it comes to what we refer to as Fluid Tech. It's more of a case study, talking you through what are the key elements, why we're strong, and why we're gonna continue to win within these broader sectors that we see in front of us. Now, largely Fluid Tech to us means push to connect technology, not within the traditional plumbing sector. We take our tried and trusted push to connect technology and apply it through diversified sectors. What are we talking about specifically? Now, we're talking about componentry right through from the very small, what we call cartridges. The elements that grab onto the pipe and form that very quick installation.
Again, it makes the life of the installer that much easier. That grows, so it goes beyond the small and then gets into larger connectors, and then it's supported by pipe also. We're talking about, again, a broad spectrum of product which supports those end markets. Specifically on those end markets, let's give you some examples. We're talking about connectors that go into OEM water heaters. We're talking about water dispensers, and we work with large brands globally in terms of applying our technology into the OEM applications to support the end user. We're talking about fiber telecoms, and we've talked about our blown fiber connectors previously. Then we get into pneumatics. In fact, over 60 years ago, this was the very start of the John Guest business.
We didn't actually start with plumbing fittings. We started with pneumatic fittings. That application kind of led the way to actually to expand the business to where we are today. It goes beyond that. We're focusing on pneumatics, and you might have caught a glimpse, folks, in some of the slides, especially when we looked at the Launceston plant in the U.K., of the machinery which utilizes those small components, the push-fit connectors, which aid the air supply lines going to our machines. Not only do we kind of have the kind of circular process and we kind of develop our own fittings for use in our own machines, that then is exported globally.
We are supporting manufacturing on a global basis through, again, what we deem as Fluid Tech technology. Again, some more examples. Think vending machines. Think manufacturing automation. It's not just within a kind of extended markets. If you look at the plumbing sector as well, we are again supporting plumbing manufacturers from an OEM basis. Magnetic filters. Like the brands such as ADEY, for example, we supply all the cartridges that go into their. They're magnetic filters, so the installer has a super easy installation process. Again, just straight in with the pipe and the connection is made. Okay, so in terms of FluidTech, why do we win? We've got that sign of trust and quality.
We've got the same technology that's been used throughout our leading plumbing brands being used across the board. Same technology, made in the same factory, and that drives our operational efficiency also. Just to give some kind of figures to what we're looking at here. The U.K. Mix as we've touched on is largely geared towards plumbing and heating, whereas in continental Europe about 80% now is FluidTech. In terms of, like, who we are as an organization, we are first to market with new technologies. This is a space where we do concentrate on. We've got teams dedicated to developing new FluidTech tech, new FluidTech technology, and we will continue to innovate this space and be first to market.
Again, great brands, great quality, trust in that product, across those sectors. We've got great teams kind of supporting this. A lot of history, highly established teams who collaborate with end users. We're in the field kind of discovering new technologies, new applications. How do we, again, be first to market and, grow our FluidTech market going forward? I think it's pretty clear, guys, that we are not just a plumbing business. We're in markets beyond water movement. If you take the blown fiber connectors again, we are not working with water, we're working to keep that water out. We are kinda expanding our reach, we are bringing those new products to market, and we will continue to do so in that FluidTech space.
Very nice. Thank you, Chris. I think for now we're gonna open up to Q&A for the opportunity section.
Just a cameo on the way through.
Yeah.
We talked, Kevin talked about EZ-FLO. Chris talked about FluidTech. They're parts of our business, okay? We wanted to highlight them as case studies because I think they're parts of our business that are either newer or not as familiar. Importantly, the playbook for those parts of the business are the same as the playbook for the whole business. Don't walk away from the last slide thinking, you know, all our future's based on FluidTech. It's an important part of the business. We've got some real opportunities there based on the technology and the capability. It's really the takeaway is the playbook's the same. We're trying to give you a little bit more understanding of FluidTech, which is not our core plumbing and heating business or not our history at least. That's my cameo.
Excuse me.
Very nice.
I always wanted the comfy seat, to be honest with you.
Questions.
Will, I just wanted to ask you about the sort of brand strategy. You I know you've got the RWC umbrella, but you're obviously keeping EZ-FLO, Eastman, Cash Acme, et cetera, et cetera. Is that a conscious decision or is that something that phases over time? Everything moves sort of in RWC.
The short answer is, you know, with the recent acquisition of EZ-FLO Eastman, it's something that we're kind of revisiting constantly. You know, we think about the strong brands that we have in SharkBite. How do we continue to leverage that? SharkBite obviously is not going anywhere. But then you think about Eastman and EZ-FLO, very strong brands that resonate with that plumber. There is no plans at this moment to change the brands. You know, we're gonna leverage them and move them forward. As we go out and acquire other businesses that have strong brands, we're gonna continue to move those forward as well under the RWC umbrella.
Will, just, like, you're thinking around the age of the house.
Yep.
in the US, given you 60% repair. Like, when I think repair, I just assume low to mid-single digit, irrespective of the age of a house. Is there something there whereas the house ages, you do more repair work in plumbing or is it, or is there some sort of conversion, like a greater conversion of repair into remodel? Maybe if you've done some work around that, it'd be kinda interesting to hear it.
Yeah. The spectrum is, it varies. I mean, it can be the simple small repairs, but then it could be as large as a full re-pipe of a home. You know, call it, copper pipes get older, there's the opportunity to re-pipe the whole entire house with plastic. So that's something that you see across the spectrum. It is typically speaking smaller, but as I think we've iterated throughout, you know, as soon as something happens, you have a leak in your house, it's your most immediate issue that you're gonna solve right then and there, and that's been what's that type of job and the average size of that job is what has historically buoyed us, and we think it will continue to buoy us going forward, from that perspective. Ken.
Yeah. Yeah, look, I think it's actually. That's a really good question. It's really hard to answer. I think, again, back to the chart that Andrew presented on what drives our growth, there's market growth and there's above market growth. I think aging housing plays a little bit in both. You know, 'cause the whole industry, which is what we're trying to track there, lives with the same thing. I think the nature of our products, though, probably supports the above market growth aspect, that gives us a bit of an advantage. It's starting to get granular, though. To split that out gets a bit tough.
Okay, thanks.
Oh.
Thanks. I just had a question on Fluid Tech, actually. This might not be sort of a fair way to categorize all of the markets within Fluid Tech, but just keen to understand how much of the business is driven by installation of, I guess, new capital, versus servicing and maintaining, you know, things that are already installed.
I think a lot of Fluid Tech is actually driven through new installation. These are markets where you've got OEM, so you've got kinda appliances being built, and then you get those appliances into the market. It's not so much about repair of those products, it's about driving the new products going forwards. That's not just applicable to appliances, that then applies to a lot of the Fluid Tech categories themselves. It's more about the new rather than the repair.
Thanks. Another one on Fluid Tech. The opportunity in the Americas. Have we called on the growth opportunity in the Americas? I don't know if it's a question for you or for Heath.
No.
No? Can you give us, I guess, an update or, you know, any idea of how Fluid Tech is growing versus the broader Americas business? You know, is it one of the higher growing categories or?
I absolutely agree with Chris. It's primarily driven by new installations and new equipment. We've certainly seen the proportion of that business in repair and maintenance tick up recently. We had a whole period. It was really impacted by COVID, particularly in the U.K. and Europe, particularly Europe, almost shut down because all the bars and restaurants were shut. When they opened up, there was just a burst of repair and maintenance. In Europe and in the U.S., there was a big uptick. That now feels like it's settling back to the normal rate. This is a sector. Once you're into fluid water filtration and so on, it's sort of a high single-digit growth rate category.
I think long term, that's about where it settles out to, but there's just a lot of noise at the moment.
Perfect. Okay. To the section on EMEA growth priorities, it was said, you wanna complete the offer for new builds, and I think preferably through M&A. To the extent you can you give us an idea of where the gaps are? Like, what you need in terms of that portfolio for the new build?
Yes. We want to have a stronger offer for the new builds. That will strengthen our position, and we are thinking about solutions like drains, like ventilation. There are several options within the new build that are close to our business.
Okay. Cheers.
Heath, maybe just following on Pete's question. Your thoughts on broader M&A strategy. I know, you know, the discussions we've had sometimes is, you know, we talk about North America as a key focus. Bart's just talked about, you know, EMEA and new build. It seems like the strategy is broader than just one region. Can you just give us an update on your thinking at the moment for the group?
Yeah. For sure. I think, you know, back to the whole idea of the plumber's truck or everything in the aisle, there's more stuff we don't have than we do, and not all of it makes sense to develop ourselves. I think acquisition is a real opportunity there, and that's valid in U.K. It's certainly valid in the U.S. I think it's even valid in Australia. Our view hasn't really changed there in terms of trying to sort of continue to fill out that product range, you know, give us better distribution and so on. Look, some of it's definitely goes beyond R&R into new construction. I think there's a there the
You know, as Bart was pointing out, that is an interesting one for us in the U.K. to have a broader suite of product. If you've got that relationship with the builder, then take more product through the door. I think that's part of it. Europe, we've talked about a little bit as well, and that really for us in the plumbing area is about getting the platform. Acquiring John Guest some years ago gave us a really solid platform in the U.K. If there was an opportunity like that in Europe, I think that'd make sense. Fluid Tech, really important part of our business, but it's not the platform in Europe. It's OEM specialist distribution. It doesn't give us that platform for the plumbing and heating business.
So.
Thanks.
Hey, just a question on the air pneumatics potential within Fluid Tech. I mean, we've been talking about sort of more housing, residential related or commercial. I mean, pneumatics, I think, can be much broader, you know, industrial automation or, you know, air transport, you know. Are we looking at that? Is that a potential, or are we still looking at sort of probably more like a air conditioning unit than sort of?
That, in that particular one, that's more the industrial application, Chris, which has been a part of the business for a long time. I think the smaller John Guest fittings have—we've always sold into air, but I think the SharkBite technology that we brought to that party has then given us a bigger, broader range to a product to take to that same marketplace.
You had a bullet point up there on the continent, talking about getting into RMI via hardware. Is that anything that could move the dial in the short to medium term, or do you need that sort of M&A platform to drive that?
Can you repeat the question, Gordon?
That's the Hornbach.
Okay.
Opportunity.
Yeah. Yes. We start there with the SharkBite, as it is the most requested solution that can be extended to plastic fittings, that can be extended to the whole range, but we need to have an entry point. Germany is one. Italy and France are the next ones.
Look, it's a trial. You know, we're not gonna be talking about revenue in European retail next year or probably the year after. The interesting thing, this was mentioned before, is the knowledge we've gained here in the US, which is. We know a bit about it. We've failed many times and we've worked it out, I think. We've taken that to Europe. The trial we're doing there really matches the sorts of trials we still do here today, which is one store or five stores, trial it, if it works, then roll it out. If it doesn't, then you pull it back. We're using that capability and swapping it. We thought it was worth calling out.
I won't be retiring next year on the back of that volume, so. Okay.
Right.
Very good. Home stretch.
Do you want me to throw it at you?
Okay. I don't know why I always seem to get the graveyard shift between now and lunch, but listen, thanks for your patience. You've been sitting for nearly three hours now, so I promise you, we only have another 37 slides to go. Look, I've got the pleasure of introducing some of the other aspects of our operation here. Our environmental goals, which you'll see up here, all really driven to create lasting impact. I'll talk about some of our people-related activities. You know we're already working on our Scope 1 and 2 targets, and specifically, we're really looking at our GHG emissions reduction targets and those plans by the end of 2022. In a moment, you'll hear examples of that from Edwin and Dixon on how we're bringing those to life.
Not only are we driving the environmental targets, we're also making commitments around gender diversity and reducing injuries. I'll cover some of those more social impacts from an employee perspective a little later on. Edwin.
All right. You saw on the slide from Gillian, by the end of this year, we're gonna come out with, you know, the targets that we're gonna set ourselves on the ESG side. That obviously doesn't stop us from, you know, starting to do actions already about, you know, how do we save energy around, you know, our facilities. I'm gonna take you through a couple of examples of what we're doing in the UK. You saw the video about what we're doing in Launceston already. You know, talked about, you know, the whole replenishment of the machine park, and that is actually significant utilization savings that we're doing.
We've got the solar panels on the roof there, and we also set ourselves a target to purchase 100% of green energy. If I look around, you know, my region at the moment, actually in the UK, all electricity that we purchase is green. We are trying to do the same with gas, but you can understand that in the current situation, changing gas supplier is not the easiest in getting a green source. That's definitely something we gotta do, and we are doing the same for the continent. The other thing that we're really trying to do is to see what type of resources that we use. With that, I mean, we've looked at what do we do with our packaging.
We started out with bringing a more uniform packaging to the market. While we do that, we have also said, "Okay, what can we do to improve, you know, the ESG footprint of that packaging?" We've gone about that with what we call the four Rs, okay? It starts with refuse. That means we've looked at every single packaging that we use, and do we actually need it? Sometimes we have a box which then has, you know, bags with five, and then it has a central bag around it. Do you still need that? Yes or no? We are significantly looking at, you know, can we reduce the amount of plastic packaging that we're actually using? The second one is reduce. What we mean with that is, can we use thinner gauge plastic than we've done before?
Can we actually use bags that are fit for size? If you looked in history, we would buy, you know, the similar size bags for a lot of applications, and in some cases, you could actually do with half of that size. Where, you know, we would have that uniformity of size a couple of years ago, we are now going more to how can I make the bag as small as possible so my usage becomes as small as possible? The other R is what we call reprocess, and that means we do not buy any plastic material that doesn't have recycled content. That's also been a big initiative from a sourcing point of view.
Not the easiest thing to do, but it's something we gotta drive if we wanna become part of that circular world that we wanna do. I think one of the biggest things that we've done is to redesign all of our cardboard boxes. We've basically gone through all of them and gone through to corrugated sheet. As you can see, you know, on the page, that has created for us a huge amount of reduction in weight that we actually have in cardboard, and we have up to 70% of recycled content in them. Again, this is what we're trying to drive across the business. This program, next to reducing 30% of our carbon dioxide footprint on our packaging, is also actually saving us AUD half a million a year.
We fully realize that, you know, in all the ESG programs, we can do some savings, but we also know that for some of them, it will just be an investment in order to, you know, to reduce our footprint. We started our journey, and this is a journey that will definitely, you know, take more than the two years in order to get to the targets we wanna get to by 2030.
Where's the third button? Oh, wait. You got it. I've probably never felt as much pressure on a single slide as this one, 'cause he told me yesterday that this is his favorite slide in the entire deck. Hopefully I do it justice. As you've seen throughout today, we use a ton of brass in our products. You've seen it in all the slides, in the different products that we have, we use a ton of brass. Brass uses a ton of copper. Depending on the alloy, you can have 60%-70% of the brass is made up of copper. Okay? Copper being such a critical piece of the manufacturing process, it's incredibly important that we maintain a flow.
To get a ton of copper, you have to go through 150 tons of dirt to get a ton of copper. Well, what do you do? You go out into the wilds of Canada, deer and elk running all around in the fields in this mountain, and you dynamite the mountain. You pour a whole bunch of diesel fuel into the biggest front-end loader you've ever seen in your life, and you load that 150 tons of dirt into the biggest dump truck you've ever seen in your life, also filled with diesel fuel.
You take that dump truck, drive it into town, take a whole thousands and thousands of gallons of potable water, wash it over the dirt to pull out the copper, throw it into a massive machine with the biggest electric motor you've ever seen in your entire life, and pour as much more electricity to spin out the copper from that. I've taken this 150,000 tons of dirt to my 1 ton of copper. I could just walk in my backyard and pull it up out of the ground. This is. I don't know if most of y'all are my age, you remember everybody used to have home phones, and so we ran hundreds and hundreds and hundreds of miles of telecommunication cable all under the ground.
What we can do now is we can go, and we can pull this cable up out of the ground, and we can transform it into copper. This cable right here is 60% copper. We've got a great display outside, and I'll have this, but you look at it, you can see the copper. Problem is, it's in about a million different pieces, all with plastic sheeting. We've developed a very special process to be able to take this cable, strip out the copper. We're able to recycle, so of the 60% copper. I'm getting tripped over my words here. 60% of the copper, of the remaining 40%, we can take 60% of that waste and recycle.
This piece of cable that comes out of the ground, we take 84% and keep it from the landfill. We avoid all the mining activity on the copper, and then we take this, and we reuse 84% of it. We take the copper into our LCL bar manufacturing plant in Australia, and 100% of the copper that we use in that factory comes from this cable. We're not having to depend on dynamite in the side of the mountain and all the diesel and all the environmental impact that's done from that. We take this copper, turn it into brass bar, and then turn it into every product that we make in brass right out of our backyard.
Good job.
Was that good?
Thank you. Not only did Dixon get to present his favorite slide, it's also Dixon's birthday today. We thought that would be a great birthday gift for him. I promise two slides, and then we'll get you to lunch. Here's some of the achievements we've made around the social impact activities. I'll let you read the slide, but we've made impact from volunteering to our employee resource groups to growing diversity in our pipeline. It's not just about the impact that we leave on the people and the communities around us. It's really increasingly how we create an inspiring workplace to attract and retain the talent we need to grow. As you know, in the world today, that's a much more competitive environment.
In addition to a really highly engaged workforce, and you can see there, top left, 74% overall engagement, which, you know, would be classed as pretty top quartile employee engagement, and we're currently in the middle of our next annual survey. We've improved gender diversity, not only in our leadership team, but in the wider business. Since the end of June, of course, we've added a new leader in the Asia-Pacific business, so we've improved our gender diversity on our leadership team as well. Look, to me, gender diversity isn't just about gender. We've made significant roads to improving our talent pipeline through new sources of talent. Like in the Americas, we're posting opportunities to more diverse job boards like disabled and military or veterans.
In EMEA, we've partnered with Women in Engineering, and we've just been able to garner some incredible talent as a result of that partnership. You know, one of whom won the U.K.'s top fifty women in engineering during the summer. Another great program here that you can see is our partnership with a local school in the U.K. Not only are we impacting the community around us. We're sowing the seeds to what Will alluded to, which is attracting talent, either one into the trades and plumbing, or two into manufacturing. You know, which for us is just critical in terms of keeping this talent supply going.
Before I hand back to Heath, you've heard from all of our presenters so far, whether they've referred to it specifically at the start of Andrew's presentation, or they've referred to to it more subtly. They talk about our culture, and they talk about our people. Over the last 24 hours, and of course, many of you have had much longer-term relationships with RWC, you've had an opportunity to meet our people who are driving the business day in and day out. We believe we've got something pretty special here, not just in what we do, but in who we are. We're not afraid to try new things. We punch way above our weight, and we move with speed. We really embrace governance, but we'll reject bureaucracy if it slows us down.
We've got the right strategy, we've got the right products, and we've got the right talent and culture to drive growth. In a new role to RWC, my remit is about building on those things and really leveraging it to make sure we're even more successful in the future. Whether that's through identifying the niche skills that are gonna be critical for us to build that pipeline, whether it's molding or product leadership or engineering or the commercial acumen we need to enter new verticals and new markets, we're really looking at whether it's talent management practices, whether it's succession planning or strategic workforce planning. Over the next three years, we're gonna be putting in place the building blocks, the plumbing infrastructure for ourselves to continue attracting and retaining the people that we need for the future to grow. Heath, over to you.
Okay. Thanks, Gillian. I can't believe Andrew got to present the Plumbing Matters slide at the beginning. This is my consolation prize. Before we jump into the wrap-up, are there any questions for the ESG session?
Stunned over these slides.
Okay, let's wrap up. We had this slide at the beginning. These are the takeaways. Andrew's slide showed that our growth has accelerated post the IPO. That's our aspiration going forward, is to continue that sort of trajectory. I think we've got the playbook and the strategy to achieve that. First thing. Second thing, the opportunity and our position is tremendous. We will continue to outperform the market regardless of what the macro environment is. The third thing, we've worked on the business. There's a lot of effort that's gone into increasing the capacity and the capability and the talent and the people in our business over the last few years. I really like where we're positioned and the outlook, quite frankly. That's it. Lunchtime.
Q&A.
I thought we just did Q&A.
Any final Q&A?
Okay, final Q&A.
Heath, it's oftentimes of extremes that sort of prompt change. Just interested in a world where we've seen $10,000 copper, et cetera. Are there any opportunities you've been investigating in sort of intermaterial shifts, change around that, new product innovation from that perspective?
Sure. Lots. You're not going to get to walk around engineering, but if you could walk around engineering, you'd see lots of weird and wonderful stuff on desks. A lot of it that uses less brass and less copper than the prior design. Yeah, that's absolutely impacted our thinking. You can see it's not just in product design. It flows through to the way we operate the business, getting control of that copper recycling and so on. It's what I said before about supply chain. Our thinking on a lot of stuff is a bit different now to what it was in the past, for sure. Heath?
Heath, just to follow on to that question, actually. You know, the business has been focused on continuous improvement from a product, operational, and financial perspective. Do you think given the challenges over the last, say, 12-18 months, whether it's supply chain, whether it's labor, do you think that's accelerated the way that the company and the management team or the team more broadly is approaching that continuous improvement?
It's a really good question. It certainly has forced us to be more agile. I mean, every day brings new challenges. I don't think we're unique there. I think it's actually hard to sometimes pull yourself out of the day-to-day. I'd like to think that when we get how far down the track, is it 6 months, is it 12 months, is it 18 months down the track when there's a bit more normalcy to the supply chain. We've stopped talking about supply chain. It hasn't stopped being a problem. Okay? It's just we've just stopped talking about it.
I'd like to think that 6, 12, 18 months down the track, we will find that we're actually a better business and better able to operate on a daily basis than what we were beforehand, kind of because we had to. I think that continuous improvement, back to your specific point, is built in a little bit. Sometimes you're not consciously aware of that's what you're working on, perhaps. Look, one example there, and I think we were talking about this last night with Peter, is we had a. With Andrea and her team, we had a just our regular review of where the overall sort of working capital inventory is at in the Americas business. Our days of inventory right now is lower than what it was in 2019, okay?
Because the days take the inflation into account. You take that out, and it's like, we're not operating too badly. You dig further into that, the average transit time back then was 30 days, it's now 45 days. Okay. We've had to absorb an extra 15 days that that's stuff's on the water. That's more than 10% of our total, inventory on hand. Essentially, we are operating the business today with less inventory than what we were operating the business in 2019. If you'd have asked me that beforehand, it would've been like, "Oh, no, it's about the same." You know, and that's just one of those things, incrementally, you get better as you go on. Hope that answers the question or
Yeah, it does. Thank you.
Hey, Heath. Just on NPD, I suppose you're launching 1,000 SKUs this year across the whole business.
Mm-hmm.
What's the failure rate or slash average product life across the business, and how has that changed since IPO? Have you got better at launching products, and do they kinda tick the box better than they did?
Oh my goodness. Absolutely. I like to use better. I think you'll sort of see that this afternoon when we get into that facility, is sort of that process we go through of thinking about the product and what the end user wants. It's really easy to sit at a desk. I mean, I've done this as an engineer years ago. You sit at a desk, you think you've got the best idea, and it's the solution that works, and you design it, and you get there, and no one wants it. I think our whole mindset has changed over the last 10 or 20 years and really accelerated in the last few years, I think, whether it be in all parts of the world.
Yeah, there's no question we've got better at it. Do we still fail? Absolutely. It's what the trials are for. You judge that based on you or that impacts how broad the trial is. Are we gonna trial this in 1 store or with 1 end user, or are we gonna go 10 stores? It's just, that's absolutely this is gonna work because we've done the research, and we just roll it out completely. But we still mess up for sure, but we've got better.
What's your key return metric on that? Is it a return on capital, or do you look at 10 things and kind of weight average them?
Look, I mean, ultimately, the return on capital at that point of a big new product initiative, some of the small ones, it doesn't make. You can't really do the calculation. The overall business, obviously, we track that on an ongoing basis. We also track it by our vitality index by region, you know, what's the revenue in this period for the things we've launched over the last X years based on the product category and so on. Yeah, we keep track of that.
Heath, could you comment on whether or not any consideration is given to selling directly to plumbers?
Yeah, zero.
The trade-off between-
Zero.
Okay.
Zero consideration. 'Cause the trade-off. Sorry to sort of interrupt there.
No, really just trying to understand how you, obviously, how retailers would respond, but the margin uplift associated with it.
Look, there's no way we can duplicate the 23,000 outlets. If you're taking the U.S., we're, you know, giving our end users access to the products via that platform is just immensely powerful. Our real customer is the contractor, the end user, so we have to know them and their needs, and we spend time with them on site, which is what sort of this afternoon is all about demonstrating, I think. We need that mechanism via the distribution to get maximum access for our product to the marketplace.
Thank you.
Okay. I think we're there.
We're done.
That's it for the presentation. Sorry, we didn't have 270 slides, but this was the best we could do. Enjoy lunch, and we'll all gather together in the training center later on. Thanks, everyone.